Note 10 - Revolving Line of Credit and Long-term Debt |
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Debt Disclosure [Text Block] |
NOTE 10 — REVOLVING LINE OF CREDIT AND LONG-TERM DEBT
The Company’s long-term debt as of June 30, 2026 and June 30, 2025, consisted of the following:
In March of 2026, the Company entered into a $350 million senior secured credit facility consisting of a $200 million -year term loan and a $150 million revolving credit facility. The Company is required to make quarterly principal payments of $2.5 million against the term loan, starting in the quarter ending June 30, 2026, with an increase to $3.75 million of such quarterly payments scheduled in June 2028 and with an increase to $5.0 million of such quarterly payments scheduled in June 2030, and the balance of the term loan due at maturity on March 24, 2031. The revolving credit facility is also scheduled to expire on March 24, 2031. Interest on the term loan and any loans made under the revolving credit facility is based on the Secured Overnight Financing Rate (“”) or a customary base rate (which may include Daily Simple SOFR or the Prime Rate), to be determined by reference to customary market benchmarks, in each case plus an applicable margin that is anticipated to vary based on the Company’s consolidated total net leverage ratio, which is calculated to be consolidated funded debt minus unrestricted cash and cash equivalents against earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the line of credit agreement. As of June 30, 2026, the interest rate applicable to the term loan was 5.5% and the Company’s borrowing rate against its revolving line of credit was 6.2%. The increment over the SOFR borrowing rate is 250 basis points for the fourth quarter of fiscal year 2026. In addition to interest on outstanding amounts, the Company also pays a commitment fee on the unused balance of the revolving credit facility, fluctuates between 17.5 and 27.5 basis points based on the Company’s consolidated total net leverage ratio. Under the terms of the credit agreement, the Company is required to comply with a financial covenant that limits the ratio of indebtedness and unrestricted cash to EBITDA measured on a quarterly basis, with a maximum net leverage ratio of 4.00 to 1.00 at closing, which is reduced to 3.75 to 1.00 in the fiscal quarter ending December 31, 2026, and further to 3.50 to 1.00 in the fiscal quarter ending September 30, 2027. The Company is also required to maintain an interest coverage ratio, measured on a quarterly basis, equal to or above the minimum set forth in the agreement, which as of closing was to 1.00. As of June 30, 2026, there was $90.0 million available for borrowing under the combined $150 million line of credit.
The Company is in compliance with all of its loan covenants as of June 30, 2026.
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