Financing Agreements |
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| Financing Agreements | Financing Agreements Long-term debt consists of the following:
Credit Agreements On May 11, 2023, we closed on a $75,000 senior credit facility (the “Credit Facility”) pursuant to a Credit Agreement dated as of May 11, 2023 (as amended, restated, modified, or supplemented from time to time, the “Credit Agreement”), between and among the Company, JPMorgan Chase Bank, N.A. (the “Administrative Agent”), the Lenders (as defined in the Credit Agreement), and the other Loan Parties (as defined in the Credit Agreement). The Credit Facility consists of a $60,000 asset-based revolving credit facility maturing on May 11, 2026 (the “ABL”), which is secured by first priority lien on the Company’s assets pursuant to a Pledge and Security Agreement, dated as of May 11, 2023, by and among the Company, Daktronics Installation, Inc., and the Administrative Agent (the “Pledge and Security Agreement”), and a $15,000 delayed draw term loan (the “Delayed Draw Loan”) secured by a first priority mortgage on our Brookings, South Dakota real estate (the “Mortgage”) pursuant to the Pledge and Security Agreement. Under the ABL, certain factors can impact our borrowing capacity. As of April 26, 2025, our borrowing capacity was $36,274, there were no borrowings outstanding, and there was $3,393 used to secure letters of credit outstanding. We made no borrowings on this ABL during fiscal 2025. The interest rate on the ABL is set on a sliding scale based on the trailing 12-month fixed charge coverage and ranges from 2.5 to 3.5 percent over the secured overnight financing rate (SOFR). The $15,000 Delayed Draw Loan was funded on July 7, 2023. It amortizes over 10 years and has monthly payments of $125. The Delayed Draw Loan is subject to the terms of the Credit Agreement and matures on May 11, 2026. The interest rate on the Delayed Draw Loan is set on a sliding scale based on the trailing 12-month fixed charge coverage ratio and ranges between 1.0 and 2.0 percent over the Commercial Bank Floating Rate (CBFR). The interest rate as of April 26, 2025 for the Delayed Draw Loan was 8.5 percent. On June 10, 2025, we entered into a Consent and Amendment No. 4 to Credit Agreement, effective as of June 6, 2025 (the “Fourth Amendment”), which, among other changes to the Credit Agreement, permits the Company to secure Letters of Credit (as defined in the Credit Agreement) with terms that expire after the Credit Agreement’s scheduled maturity date of May 11, 2026 under certain conditions (the “Specified Letters of Credit”). For more information about the Fourth Amendment and the Specified Letters of Credit, see “Note 18. Subsequent Events” of the Notes to our Consolidated Financial Statements included in this Form 10-K. Convertible Note On May 11, 2023, we borrowed $25,000 in aggregate principal amount under the secured Convertible Note issued to Alta Fox Opportunities Fund, LP (the “Holder”). The Convertible Note provided for the following conversion features: •The Convertible Note allowed the Holder and any of the Holder’s permitted transferees, donees, pledgees, assignees or successors-in-interest to convert all or any portion of the principal amount of the Convertible Note, together with any accrued and unpaid interest and any other unpaid amounts, including late charges, if any (together, the “Conversion Amount”), into shares of the Company’s common stock at an initial conversion price of $6.31 per share, subject to adjustment in accordance with the terms of the Convertible Note (the “Conversion Price”). •The Company also had a forced conversion right, exercisable on the occurrence of certain conditions set forth in the Convertible Note, pursuant to which it could cause all or any portion of the outstanding and unpaid Conversion Amount to be converted into shares of common stock at the Conversion Price. On November 11, 2024, the Company issued notice to the Holder that the Company would force the conversion of $7,000 of the principal balance and accrued interest of the Convertible Note on December 3, 2024 at the conversion price of $6.31 per share into 1,109 shares of the Company’s common stock (the “December Conversion”). On December 11, 2024, the Company issued notice to the Holder that the Company would force the conversion of an additional $7,000 of the principal balance and accrued interest of the Convertible Note on January 3, 2025 at the conversion price of $6.31 per share into 1,109 shares of the Company’s common stock (the “January Conversion”). On January 27, 2025, in accordance with the terms of the Convertible Note, the Company settled the December Conversion and the January Conversion through the issuance of 2,218 shares of the Company’s common stock (based on the Conversion Price). On January 10, 2025, the Company issued notice to the Holder that the Company would force the conversion of $7,000 of the principal balance and accrued interest of the Convertible Note on February 3, 2025 at the Conversion Price into 1,109 shares of the Company’s common stock (the “February Conversion”). On February 3, 2025, in accordance with the terms of the Convertible Note, the Company settled the February Conversion. On February 10, 2025, the Company issued notice to the Holder that the Company would force the conversion of the fourth and final tranche of 681 shares or $4,294 on March 4, 2025, representing the remaining principal and interest balance of the Convertible Note (the “March Conversion”). On March 4, 2025, in accordance with the terms of the Convertible Note, the Company settled the March Conversion, resulting in full settlement of the Convertible Note. Interest The estimated fair value of the Convertible Note upon its issuance date of May 11, 2023 was computed using the binomial lattice model. Given the appreciation of the Company’s stock price from the issuance of the Convertible Note combined with our then intent and expectation of settlement as soon as is feasible through exercise of its forced conversion right, we determined that the Monte Carlo simulation (“MCS”) model was appropriately suited to determine the fair value of the Convertible Note during the second and third quarter of fiscal 2025. The valuation models incorporate significant inputs that are not observable in the market and thus represent a Level 3 measurement. The changes in fair value of the Convertible Note during fiscal 2025 was as follows:
During the interim periods for the year ended April 26, 2025, prior to conversion of the Convertible Note, we determined the fair value using the following range of key assumptions: Risk-Free Rate (Annual) of 4.04%-4.24%, Implied Yield of 15.79%-15.98% and Volatility (Annual) of 40%-55%. For the year ended April 27, 2024, we determined the fair value by using the following key assumptions in the binomial lattice model:
The Credit Agreement requires a fixed charge coverage ratio of greater than 1.1 and include other customary non-financial covenants. As of April 26, 2025, we were in compliance with our financial covenants under the Credit Agreement. Debt Issuance Costs Debt issuance costs incurred and capitalized are amortized on a straight-line basis over the term of the associated debt agreement. If early principal payments occur, a proportional amount of unamortized debt issuance costs is expensed. As part of these financings, we capitalized $8,195 in debt issuance costs. During the fiscal year ended April 27, 2024, due to the Convertible Note being accounted for at fair value, we expensed $3,353 of the related debt issuance costs, which are included in the “Other expense and debt issuance costs write-off, net” line item in our Consolidated Statements of Operations. During the fiscal years ended April 26, 2025 and April 27, 2024, we amortized $1,614 and $1,551, respectively, of debt issuance costs. The remaining debt issuance costs of $1,677 are being amortized over the remaining term of the Credit Facility. Future Maturities Aggregate contractual maturities of debt in future fiscal years are as follows:
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