Financing Agreements |
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| Financing Agreements | Financing Agreements The following table summarizes the components of our long-term debt as of the dates indicated:
Credit Agreements On May 11, 2023, the Company entered into 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., as administrative agent (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 made pursuant to the Credit Agreement is comprised of: •a $60,000 asset-based revolving credit facility (the “ABL”), maturing on May 11, 2026, secured by a first-priority lien on the Company’s assets pursuant to a Pledge and Security Agreement dated May 11, 2023, between 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”), also secured by the first priority lien on the Company’s assets pursuant to the Pledge and Security Agreement and a first-priority mortgage on the Company’s real estate located in Brookings, South Dakota. Under the ABL, borrowing capacity is subject to certain conditions and may fluctuate based on various factors. As of August 2, 2025, the Company’s borrowing capacity under the ABL was $41,539, with no borrowings outstanding and $2,547 utilized for outstanding letters of credit. No borrowings were made under the ABL during the period ended August 2, 2025. The interest rate on the ABL is determined on a sliding scale based on the Company’s trailing 12-month fixed charge coverage ratio 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 a 10-year period with monthly principal payments of $125 and matures on May 11, 2026. The interest rate on the Delayed Draw Loan is also determined on a sliding scale based on the trailing 12-month fixed charge coverage ratio and ranges from 1.0 and 2.0 percent over the Commercial Bank Floating Rate (“CBFR”). As of August 2, 2025, the interest rate applicable to the Delayed Draw Loan was 8.5 percent. On June 10, 2025, we entered into a Consent and Amendment No. 4 to the Credit Agreement, effective as of June 6, 2025 (the “ Fourth Amendment”), which, among other changes, amends the Credit Agreement to permit the Company to secure the 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”). Pursuant to the Fourth Amendment, no later than 91 days before the Maturity Date (as defined below), the Company must deposit an amount of cash equal to 105% of the LC Exposure (as defined in the Credit Agreement) into one or more accounts (collectively, the “Specified LC Collateral Account”) controlled exclusively by the Administrative Agent. The Company will grant a security interest in the Specified LC Collateral Account to the Administrative Agent. The funds in the Specified LC Collateral Account will be used to cover any unreimbursed amounts owed to the issuing Lender, subject to certain exceptions. The funds in the Specified LC Collateral Account will be returned to the Company and the other Borrowers (as defined in the Credit Agreement) if the scheduled Maturity Date is further extended. The Fourth Amendment also requires the Borrowers to fully pay any and all outstanding amounts owed under the Delayed Draw Loan on or before the earlier of: (i) May 11, 2026; and (ii) any earlier date on which the Commitments (as defined in the Credit Agreement) are reduced to zero or otherwise terminated pursuant to the terms of the Credit Agreement (the “Termination Date”). The Fourth Amendment also provides that the Borrowers’ repayment obligations under the Credit Agreement will mature on the earliest of: (A) November 30, 2026; (B) unless otherwise agreed in writing by the Administrative Agent (with the consent of all Lenders), the date that is six (6) months prior to the scheduled maturity date of the Term Loan Debt (as defined in the Credit Agreement); and (C) the Termination Date (such earliest date, the “Maturity Date”). The Credit Agreement contains covenants that, among other things, restrict our ability to repurchase shares of common stock, pay dividends, incur additional indebtedness, and make certain investments. As a result, our ability to return capital to stockholders through share repurchases or dividends is limited while the Credit Facility is outstanding. For more information on the Company’s ability to repurchase shares under the Credit Agreement, please refer to “Note 13. Subsequent Events” of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and “Item 2. Unregistered Sales of Equity Securities and Use of Proceeds” and “Item 5. Other Information” of Part II of this Quarterly Report on Form 10-Q. Convertible Note As of August 2, 2025 and April 26, 2025, there was no outstanding balance under the Convertible Note. During fiscal 2025, the Company fully settled the Convertible Note through a series of forced conversions in accordance with its terms. These conversions resulted in the issuance of shares of the Company’s common stock to Alta Fox Opportunities and the extinguishment of the debt on the dates of settlement. Accordingly, there is no remaining principal or accrued interest associated with the Convertible Note, and no further obligations under its terms. Additional details regarding the Convertible Note activity during fiscal 2025 are included in “Note 17. Related Party Transactions” of the Form 10-K. Debt Issuance Costs Debt issuance costs incurred and capitalized are amortized on a straight-line basis over the term of the related debt agreement. In the event of early principal payments or conversions, a proportional amount of unamortized debt issuance costs is expensed. Amortization of debt issuance costs totaled $403 for each of the three months ended August 2, 2025 and July 27, 2024. As of August 2, 2025, the remaining unamortized debt issuance costs of $1,274 are being amortized over the remaining term of the Credit Facility. Future Maturities The following table presents the aggregate contractual maturities of our long-term debt by fiscal year:
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