Long-Term Debt

3 Months Ended

Sep. 30, 2023

On August 14, 2020, the Company entered into a loan agreement with Bank of America. The Loan Agreement replaces the Company’s prior amended and restated credit agreement, as amended, with Wells Fargo Bank. The Loan Agreement provides for a five-year asset-based senior secured revolving credit facility of up to $93 million, maturing on August 14, 2025.

On September 3, 2021, the Company entered into an amendment to the Company’s current loan agreement with Bank of America. The amendment increased the Company’s current credit facility of $93 million to $120 million, subject to the Company’s borrowing base, maturing on September 3, 2026.

On August 26, 2022, the Company entered into a third amendment to the loan agreement with Bank of America. The amendment removed the cash flow leverage ratio covenant and increased the interest rate by 25 basis points.

As of September 30, 2023, the Company had an outstanding balance under the asset-based revolving credit facility of $110.5 million, $0.3 million in outstanding letters of credit and $9.5 million available for future borrowings.

In the third quarter of fiscal year 2023, the Company entered into equipment financing agreements with Ameris Bank dba Balboa Capital ("Balboa Capital") totaling $4.4 million related to the Company’s existing manufacturing equipment that bears an interest rate range of 6% - 8% and matures in the third quarter of fiscal 2029. Under these agreements, equal monthly payments of $75,000 commenced in the third quarter of fiscal year 2023 and will continue through the maturity of the equipment financing facility in the third quarter of fiscal 2029. The Company had an outstanding balance $4.0 million as of September 30, 2023.

On August 14, 2020, the Company also entered into a $5.0 million equipment financing facility relating to the Company’s existing U.S. manufacturing equipment that bears interest at 4.85% and matures on August 14, 2025. Under this loan agreement, equal monthly payments of approximately $94,000 commenced on September 14, 2020 and will continue through the maturity of the equipment financing facility on August 14, 2025. As of September 30, 2023, the Company had an outstanding balance of $2.1 million. As of July 1, 2023, the Company had an outstanding balance of $2.3 million under the Bank of America equipment term loan agreement.

Generally, the interest rate applicable to loans under the Bank of America loan agreement will be, at the Company’s option: (i)(A) the base rate which is the highest of (a) the Prime Rate for such day, (b) the Federal Funds Rate for such day plus 0.50%, or (c) Term SOFR for a one month interest period as of such day, plus 1.00% (provided that in no event shall the base rate be less than zero), plus the applicable interest margin for base rate loans; and (B) SOFR rate for an applicable interest period, plus the applicable interest margin for SOFR rate loans. Depending on average daily excess borrowing availability over applicable periods under the Credit Facility, applicable interest margins on : (x) base rate loans will be 1.50-2.00%; and (y) SOFR rate loans will be 2.50-3.00%, resetting on a quarterly basis beginning in early 2021. If there is an event of default under the loan agreement, all loans and other obligations will bear interest as a rate of an additional 2.00% on the otherwise applicable interest rates. In addition to interest charges, the Company is required to pay a fee of 0.25% per annum on the unused portion of the Credit Facility, monthly in arrears.

On November 24, 2020, the Company entered into a $6.0 million financing facility related to the Company’s existing real estate located in Mexico that bears interest at 5.52% and matures on April 24, 2026. Under this loan agreement, equal monthly payments of $100,000 commenced on May 24, 2021 and will continue through the maturity of the financing facility on April 24, 2026. As of September 30, 2023, the Company had an outstanding balance of $3.1 million. As of July 1, 2023, the Company had an outstanding balance of $3.4 million.

The interest rates on outstanding debt as of September 30, 2023 range from 4.85% - 8.43% compared to 4.85% - 8.22% as of July 1, 2023.

Debt maturities as of September 30, 2023 for the next five years and thereafter are as follows (in thousands):


Fiscal Years Ending	Amount
2024 (1)	$	2,155
2025	$	2,959
2026	$	1,905
2027	$	111,315
2028 - Thereafter	$	1,367
Total debt	119,701
Unamortized debt issuance costs	(1,026)
Long-term debt, net of debt issuance costs	$	118,675

(1) Represents scheduled payments for the remaining nine-month period ending June 29, 2024.

The Company must comply with certain financial covenants, including a fixed charge coverage ratio. The credit agreement requires the Company to grant certain inspection rights to Bank of America, limit or restrict the Company’s cash management; limit or restrict the ability of the Company to incur additional liens, make acquisitions or investments, incur additional indebtedness, engage in mergers, consolidations, liquidations, dissolutions, or dispositions, pay dividends or other restricted payments, prepay certain indebtedness, engage in transactions with affiliates, and use proceeds. Management believes the Company was in compliance with all financial covenants as of September 30, 2023.