atro-20250329

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 29, 2025


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 0-7087

ASTRONICS CORPORATION

(Exact name of registrant as specified in its charter)


New York (State or other jurisdiction of incorporation or organization)			16-0959303 (IRS Employer Identification Number)

130 Commerce Way, East Aurora, New York (Address of principal executive offices)			14052 (Zip code)

(716) 805-1599

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $.01 par value per share	ATRO	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☒

Emerging growth company

☐

Non-accelerated filer

☐

Smaller Reporting Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)

of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

As of May 1, 2025, 35,406,237 shares of common stock were outstanding consisting of 30,812,251 shares of common stock ($.01 par value) and 4,593,986 shares of Class B common stock ($.01 par value).

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TABLE OF CONTENTS

PAGE

PART I

FINANCIAL INFORMATION

Item 1

Financial Statements:

•

Consolidated Condensed Balance Sheets as of March 29 , 202 5 and December 31, 202 4

•

Consolidated Condensed Statements of Operations for the Three Months Ended March 29 , 202 5 and March 30 , 20 24

•

Consolidated Condensed Statements of Comprehensive Inco me (Loss ) for the Three Months Ended March 29 , 202 5 and March 30, 2024

•

Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 29 , 202 5 and March 30, 2024

•

Consolidated Condensed Statements of Shareholders’ Equity for the Three Months Ended March 29 , 202 5 and March 30, 202 4

•

Notes to Consolidated Condensed Financial Statements

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3

Quantitative and Qualitative Disclosures about Market Risk

Item 4

Controls and Procedures

PART II

OTHER INFORMATION

Item 1

Legal Proceedings

Item 1A

Risk Factors

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3

Defaults Upon Senior Securities

Item 4

Mine Safety Disclosures

Item 5

Item 6

Part I – Financial Information

Item 1. Financial Statements

ASTRONICS CORPORATION

Consolidated Condensed Balance Sheets

March 29, 2025 with Comparative Figures for December 31, 2024

(Unaudited)

(In thousands)


	March 29, 2025		December 31, 2024

Current Assets:
Cash and Cash Equivalents	$	24,805	$	9,285
Restricted Cash	1,143		9,143
Accounts Receivable, Net of Allowance for Estimated Credit Losses	194,040		191,446
Inventories	197,936		199,741
Prepaid Expenses and Other Current Assets	14,538		16,557

Total Current Assets	432,462		426,172
Property, Plant and Equipment, Net of Accumulated Depreciation	80,446		80,687
Operating Right-of-Use Assets	33,873		23,609
Other Assets	7,847		7,763
Intangible Assets, Net of Accumulated Amortization	49,546		52,477
Goodwill	58,068		58,056
Total Assets	$	662,242	$	648,764
Current Liabilities:

Accounts Payable	$	45,283	$	42,960
Current Operating Lease Liabilities	5,104		4,697
Accrued Expenses and Other Current Liabilities	76,997		81,004
Customer Advance Payments and Deferred Revenue	30,429		27,491

Total Current Liabilities	157,813		156,152
Long-term Debt	160,115		168,669
Long-term Operating Lease Liabilities	30,837		20,508
Other Liabilities	46,720		47,338
Total Liabilities	395,485		392,667
Shareholders’ Equity:
Common Stock	381		380
Accumulated Other Comprehensive Loss	(3,347)		(3,863)
Other Shareholders’ Equity	269,723		259,580
Total Shareholders’ Equity	266,757		256,097
Total Liabilities and Shareholders’ Equity	$	662,242	$	648,764

See notes to Consolidated Condensed Financial Statements.

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ASTRONICS CORPORATION

Consolidated Condensed Statements of Operations

Three Months Ended March 29, 2025 with Comparative Figures for 2024

(Unaudited)

(In thousands, except per share data)


	Three Months Ended
		March 29, 2025		March 30, 2024
Sales		$	205,936	$	185,074
Cost of Products Sold		145,087		137,560
Gross Profit		60,849		47,514
Research and Development Expenses		11,067		13,323
Selling, General and Administrative Expenses		36,645		32,525

Income from Operations		13,137		1,666


Other (Income) Expense, Net		(187)		436
Interest Expense, Net of Interest Income		3,150		5,759
Income (Loss) Before Income Taxes		10,174		(4,529)
Provision for (Benefit from) Income Taxes		646		(1,351)
Net Income (Loss)		$	9,528	$	(3,178)
Earnings (Loss) Per Share:
Basic		$	0.27	$	(0.09)
Diluted		$	0.26	$	(0.09)

See notes to Consolidated Condensed Financial Statements.

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ASTRONICS CORPORATION

Consolidated Condensed Statements of Comprehensive Income (Loss)

Three Months Ended March 29, 2025 with Comparative Figures for 2024

(Unaudited)

(In thousands)


	Three Months Ended
		March 29, 2025		March 30, 2024
Net Income (Loss)		$	9,528	$	(3,178)
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustments		752		(756)
Retirement Liability Adjustment – Net of Tax		(236)		281
Total Other Comprehensive Income (Loss)		516		(475)
Comprehensive Income (Loss)		$	10,044	$	(3,653)

See notes to Consolidated Condensed Financial Statements.

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ASTRONICS CORPORATION

Consolidated Condensed Statements of Cash Flows

Three Months Ended March 29, 2025 with Comparative Figures for 2024

(Unaudited)

(In thousands)


	Three Months Ended
	March 29, 2025		March 30, 2024
Cash Flows from Operating Activities:
Net Income (Loss)	$	9,528	$	(3,178)
Adjustments to Reconcile Net Income (Loss) to Cash Flows from Operating Activities:
Non-cash items:
Depreciation and Amortization	5,588		6,328
Amortization of Deferred Financing Fees	602		832
Provisions for Non-Cash Losses on Inventory and Receivables	1,728		767
Equity-based Compensation Expense	2,345		2,802
Deferred Tax Benefit	(1,125)		—
Operating Lease Non-Cash Expense	1,550		1,280
Non-Cash 401K Contribution and Quarterly Bonus Accrual	—		3,454
Non-Cash Annual Stock Bonus Accrual	—		1,448



Non-Cash Litigation Provision Adjustment	6,228		—






Other	(214)		968
Changes in Operating Assets and Liabilities Providing (Using) Cash:
Accounts Receivable	(2,037)		1,427
Inventories	515		(8,826)
Accounts Payable	2,867		224
Accrued Expenses	(11,514)		(1,717)
Customer Advance Payments and Deferred Revenue	2,776		(1,685)
Income Taxes	959		(1,722)
Operating Lease Liabilities	(1,071)		(1,196)
Supplemental Retirement Plan Liabilities	(101)		(101)
Other Assets and Liabilities	2,018		932
Net Cash from Operating Activities	20,642		2,037
Cash Flows from Investing Activities:

Capital Expenditures	(2,105)		(1,598)



Net Cash from Investing Activities	(2,105)		(1,598)
Cash Flows from Financing Activities:
Proceeds from Long-term Debt	1,143		1,356
Principal Payments on Long-term Debt	(10,000)		(7,249)

Stock Award Activity	(1,730)		1,713
Financing-related Costs	(740)		(809)

Other	(44)		(53)




Net Cash from Financing Activities	(11,371)		(5,042)
Effect of Exchange Rates on Cash	354		(100)
Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash	7,520		(4,703)
Cash and Cash Equivalents and Restricted Cash at Beginning of Period	18,428		11,313
Cash and Cash Equivalents and Restricted Cash at End of Period	$	25,948	$	6,610

Supplemental Disclosure of Cash Flow Information
Interest Paid	$	2,724	$	5,001
Income Taxes Paid, Net of Refunds	$	827	$	32

See notes to Consolidated Condensed Financial Statements.

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ASTRONICS CORPORATION

Consolidated Condensed Statements of Shareholders’ Equity

Three Months Ended March 29, 2025 with Comparative Figures for 2024

(Unaudited)

(In thousands)


	Three Months Ended
		March 29, 2025		March 30, 2024
Common Stock
Beginning of Period		$	329	$	314

Net Shares Issued to Fund Bonus Obligations		—		2

Net Issuance of Common Stock for Restricted Stock Units (“RSUs”)		1		1

Class B Stock Converted to Common Stock		3		1
End of Period		333		318
Convertible Class B Stock
Beginning of Period		51		59


Class B Stock Converted to Common Stock		(3)		(1)
End of Period		48		58
Additional Paid in Capital
Beginning of Period		144,149		129,544

Equity-based Compensation Expense and Net Exercise of Stock Options, including ESPP		2,345		2,802
Gross Shares Issued to Fund Bonus Obligations		—		2,747

Tax Withholding Related to Issuance of RSUs and Shares for Bonus Obligations		(1,730)		(1,027)
End of Period		144,764		134,066
Accumulated Comprehensive Loss
Beginning of Period		(3,863)		(9,426)

Foreign Currency Translation Adjustments		752		(756)

Retirement Liability Adjustment – Net of Taxes		(236)		281
End of Period		(3,347)		(9,901)
Retained Earnings
Beginning of Period		192,208		209,753


Net Income (Loss)		9,528		(3,178)
Reissuance of Treasury Shares for 401K Contribution		—		(676)


End of Period		201,736		205,899
Treasury Stock
Beginning of Period		(76,777)		(80,726)

Net Issuance to Fund 401K Obligation		—		2,009

End of Period		(76,777)		(78,717)
Total Shareholders’ Equity		$	266,757	$	251,723

See notes to Consolidated Condensed Financial Statements.

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ASTRONICS CORPORATION

Consolidated Condensed Statements of Shareholders’ Equity, Continued

Three Months Ended March 29, 2025 with Comparative Figures for 2024

(Unaudited)

(In thousands)


	Three Months Ended
(Shares)		March 29, 2025	March 30, 2024
Common Stock
Beginning of Period		32,871	31,402

Net Shares Issued to Fund Bonus Obligations		—	144

Net Issuance of Common Stock for RSUs		143	107
Class B Stock Converted to Common Stock		287	179
End of Period		33,301	31,832
Convertible Class B Stock
Beginning of Period		5,086	5,952


Class B Stock Converted to Common Stock		(287)	(179)
End of Period		4,799	5,773
Treasury Stock
Beginning of Period		2,694	2,833

Net Shares Issued to Fund 401K Obligation		—	(71)

End of Period		2,694	2,762

See notes to Consolidated Condensed Financial Statements.

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ASTRONICS CORPORATION

Notes to Consolidated Condensed Financial Statements

March 29, 2025

(Unaudited)

1) Basis of Presentation

The accompanying unaudited statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included.

Operating Results

The results of operations for any interim period are not necessarily indicative of results for the full year. Operating results for the three months ended March 29, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

The balance sheet on December 31, 2024, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

For further information, refer to the Consolidated Financial Statements and the notes thereto included in Astronics Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on March 5, 2025 (the “2024 10-K”).

Description of the Business

Astronics Corporation (“Astronics” or the “Company”) is a leading provider of advanced technologies to the global aerospace, defense, and electronics industries. Our products and services include advanced, high-performance electrical power generation, distribution and seat motion systems, lighting and safety systems, avionics products, systems and certification, aircraft structures and automated test systems.

We have principal operations in the United States (“U.S.”), Canada and France, as well as engineering offices in Ukraine and India.

The Company has two reportable segments, Aerospace and Test Systems. The Aerospace segment designs and manufactures products for the global aerospace and defense industry. Our Test Systems segment designs, develops, manufactures and maintains automated test systems that support the aerospace and defense, communications and mass transit industries as well as training and simulation devices for both commercial and military applications.

Restricted Cash

Under the provisions of the ABL Revolving Credit Facility (as defined and discussed below in Note 7, Long-term Debt and Notes Payable), the Company has a cash dominion arrangement with the banking institution for its accounts within the United States whereby daily cash receipts are contractually utilized to pay down outstanding balances on the ABL Revolving Credit Facility. Account balances that have not yet been applied to the ABL Revolving Credit Facility are classified as restricted cash in the accompanying Consolidated Condensed Balance Sheets. The following table provides a reconciliation of cash and restricted cash included in Consolidated Condensed Balance Sheets to the amounts included in the Consolidated Condensed Statements of Cash Flows.


(In thousands)	March 29, 2025		March 30, 2024
Cash and Cash Equivalents	$	24,805	$	5,308
Restricted Cash	1,143		1,302
Total Cash and Restricted Cash Shown in Statements of Cash Flows	$	25,948	$	6,610

Trade Accounts Receivable and Contract Assets

The allowance for estimated credit losses is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as the age of the receivable balances, historical experience, credit quality, current economic conditions, and reasonable and supportable forecasts of future economic conditions that may affect a customer’s ability to pay.

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The changes in allowances for estimated credit losses for the three months ended March 29, 2025 and March 30, 2024 consisted of the following:


	Three Months Ended
(In thousands)		March 29, 2025		March 30, 2024
Balance at Beginning of the Period		$	2,377	$	9,193
Bad Debt Expense, Net of Recoveries		(128)		86
Write-off Charges Against the Allowance and Other Adjustments		42		(683)
Balance at End of the Period		$	2,291	$	8,596

On February 4, 2025, the Company entered into a factoring agreement with Citibank, N.A. under which we can sell certain receivables resulting from sales to a certain customer. The arrangement is designed to provide the Company with an immediate cash advance on eligible receivables, up to a limit of $45.0 million per year, as restricted by the terms of our ABL Revolving Credit Facility. The Company did not utilize the factoring agreement during the three months ended March 29, 2025.

Research and Development Expenses

Research and development costs are expensed as incurred and include salaries, benefits, consulting, material costs, and depreciation. During the first quarter of 2025, the Company changed its financial statement presentation of research and development costs. These costs were previously included within Cost of Products Sold and were a factor in arriving at Gross Profit. Research and development expenses, which amounted to $11.1 million and $13.3 million for the three months ended March 29, 2025 and March 30, 2024, respectively, have been reclassified from Cost of Products Sold to a separate line item below Gross Profit in the accompanying Consolidated Condensed Statements of Operations. All periods presented have been revised to reflect this presentation.

Valuation of Goodwill and Long-Lived Assets

The Company tests goodwill at the reporting unit level on an annual basis or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Long-lived assets are evaluated for recoverability whenever adverse effects or changes in circumstances indicate that the carrying value may not be recoverable. The recoverability test consists of comparing the undiscounted projected cash flows with the carrying amount. Should the carrying amount exceed undiscounted projected cash flows, an impairment loss would be recognized to the extent the carrying amount exceeds fair value.

As of March 29, 2025 and March 30, 2024, the Company concluded that no indicators of impairment relating to intangible assets or goodwill existed and an interim test was not performed in the three-month periods then ended.

Foreign Currency Translation

The aggregate foreign currency transaction gain or loss included in operations was immaterial for the three months ended March 29, 2025 and March 30, 2024.

New or Recent Accounting Pronouncements

We consider the applicability and impact of all ASUs. There have been no new applicable accounting pronouncements or changes in accounting pronouncements during the three months ended March 29, 2025 as compared with the recent accounting pronouncements described in the 2024 10-K. ASUs not disclosed were assessed and determined to be either not applicable or had or are expected to have minimal impact on our financial statements and related disclosures.

2) Revenue

On March 29, 2025, we had $673.0 million of remaining performance obligations, which we refer to as total backlog. We expect to recognize approximately $508.3 million of our outstanding performance obligations as revenue over the next twelve months and the balance thereafter.

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The Company's contract assets and contract liabilities consist primarily of costs and profits in excess of billings and billings in excess of cost and profits, respectively. The following table presents the beginning and ending balances of contract assets and contract liabilities:


(In thousands)	Contract Assets		Contract Liabilities
Beginning Balance, January 1, 2025	$	54,171	$	28,171
Ending Balance, March 29, 2025	$	56,040	$	31,099

The increase in contract assets reflects the net impact of new revenue recognized in excess of billings exceeding billing of previously unbilled revenue during the period, partially offset by a $1.9 million revision of estimated costs to complete a certain long-term mass transit Test contract, which was recorded in the first quarter of 2025. The revision resulted in reduced revenue recognized during the three months ended March 29, 2025 due to lower estimates of the percentage of work completed on the program. The increase in contract liabilities reflects the net impact of new customer advances or deferred revenues recorded in excess of revenue recognized.

We recognized $11.6 million and $9.2 million during the three months ended March 29, 2025 and March 30, 2024, respectively, in revenues that were included in the contract liability balance at the beginning of the period.

The Company recognizes an asset for certain, material costs to fulfill a contract if it is determined that the costs relate directly to a contract or an anticipated contract that can be specifically identified, generate or enhance resources that will be used in satisfying performance obligations in the future, and are expected to be recovered. Such costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods to which the asset relates. Start-up costs are expensed as incurred. Capitalized fulfillment costs are included in Inventories in the accompanying Consolidated Condensed Balance Sheets. Should future orders not materialize or it is determined the costs are no longer probable of recovery, the capitalized costs are written off. The Company capitalized fulfillment costs of $5.3 million and $8.3 million on March 29, 2025 and December 31, 2024, respectively. Amortization of fulfillment costs recognized within Cost of Products Sold was $3.3 million and $0.3 million for the three months ended March 29, 2025 and March 30, 2024, respectively.

The following table presents our revenue disaggregated by Market Segments as follows:


	Three Months Ended
(In thousands)		March 29, 2025		March 30, 2024
Aerospace Segment
Commercial Transport		$	137,542	$	121,430
Military Aircraft		33,263		17,079
General Aviation		15,243		19,551
Other		5,327		5,578
Aerospace Total		191,375		163,638

Test Systems Segment

Government & Defense		14,561		21,436
Test Systems Total		14,561		21,436

Total		$	205,936	$	185,074

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The following table presents our revenue disaggregated by Product Lines as follows:


	Three Months Ended
(In thousands)		March 29, 2025		March 30, 2024
Aerospace Segment
Electrical Power & Motion		$	100,080	$	83,124
Lighting & Safety		49,671		41,787
Avionics		28,234		25,594
Systems Certification		5,068		4,448
Structures		2,995		3,107
Other		5,327		5,578
Aerospace Total		191,375		163,638

Test Systems		14,561		21,436

Total		$	205,936	$	185,074

3) Inventories

Inventories consisted of the following:


(In thousands)	March 29, 2025		December 31, 2024
Finished Goods	$	29,101	$	27,941
Work in Progress	31,925		31,927
Raw Material	136,910		139,873
	$	197,936	$	199,741

4) Property, Plant and Equipment

Property, Plant and Equipment consisted of the following:


(In thousands)	March 29, 2025		December 31, 2024
Land	$	8,589	$	8,551
Buildings and Improvements	72,396		72,150
Machinery and Equipment	128,015		125,874
Construction in Progress	4,183		3,997
Total Property, Plant and Equipment, Gross	213,183		210,572
Less Accumulated Depreciation	132,737		129,885
Total Property, Plant and Equipment, Net	$	80,446	$	80,687

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5) Intangible Assets

The following table summarizes acquired intangible assets as follows:


		March 29, 2025				December 31, 2024
(In thousands)	Weighted Average Life	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Patents	11 years	$	2,146	$	2,146	$	2,146	$	2,146
Non-compete Agreement	4 years	11,082		11,082		11,082		11,082
Trade Names	10 years	11,411		10,404		11,380		10,351
Completed and Unpatented Technology	9 years	47,871		43,398		47,818		42,617
Customer Relationships	15 years	142,162		98,096		142,065		95,818
Total Intangible Assets	13 years	$	214,672	$	165,126	$	214,491	$	162,014

All acquired intangible assets other than goodwill and one trade name are being amortized. Amortization expense for acquired intangibles is summarized as follows:


	Three Months Ended
(In thousands)		March 29, 2025		March 30, 2024
Amortization Expense		$	2,975	$	3,270

Amortization expense for acquired intangible assets expected for 2025 and for each of the next five years is summarized as follows:


(In thousands)
2025	$	10,938
2026	$	9,533
2027	$	7,825
2028	$	7,037
2029	$	5,664
2030	$	3,583

6) Goodwill

The following table summarizes the changes in the carrying amount of goodwill for the three months ended March 29, 2025:


(In thousands)	December 31, 2024		Foreign Currency Translation		March 29, 2025
Aerospace	$	36,421	$	12	$	36,433
Test Systems	21,635		—		21,635
	$	58,056	$	12	$	58,068

7) Long-term Debt and Notes Payable

The Company amended its asset-based revolving credit facility (the “ABL Revolving Credit Facility”) on July 11, 2024, by entering into the Seventh Amended and Restated Credit Agreement, which set the maximum aggregate amount that the Company can borrow pursuant to the revolving credit line at $200.0 million, with borrowings subject to a borrowing base determined primarily by inventory, accounts receivable, machinery and equipment and real estate.

On November 25, 2024, the Company entered into a second amendment to the ABL Revolving Credit Facility which increased the maximum aggregate amount that the Company can borrow pursuant to the ABL Revolving Credit Facility to $220.0 million from $200.0 million. The maturity date of borrowings under the ABL Revolving Credit Facility is July 11, 2027. The Company and the applicable lenders also agreed in a separate first amendment to increase the amount of unsecured indebtedness the Company is permitted to incur under the ABL Revolving Credit Facility, subject to completion of the Convertible Notes offering (discussed below).

Under the terms of the ABL Revolving Credit Facility, the Company pays interest on the unpaid principal amount of the ABL Revolving Credit Facility at a rate equal to SOFR plus a term SOFR adjustment in the amount of 0.10% per annum (which collectively shall be at least 1.00%) plus an applicable margin ranging from 2.75% to 3.25% determined based upon the

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Company’s Excess Availability (as defined in the ABL Revolving Credit Facility). The Company is required to pay a quarterly commitment fee under the ABL Revolving Credit Facility on undrawn revolving credit commitments in an amount equal to 0.25% or 0.375% based on the Company’s average excess availability under the ABL Revolving Credit Facility. On March 29, 2025, there was $1.1 million outstanding on the ABL Revolving Credit Facility and there remained $187.1 million available for future borrowings, before our minimum excess availability requirement discussed below. The amount available for future borrowings as of March 29, 2025, is net of a $18.1 million reserve for the damage award relating to the patent infringement dispute in the United Kingdom discussed in Note 13, Legal Proceedings, and $2.3 million in outstanding letters of credit.

Pursuant to the ABL Revolving Credit Facility, the Company is subject to a minimum fixed charge coverage ratio of 1.10 to 1.00. The Company is also required to maintain a minimum excess availability of the greater of 10% of the borrowing base under the ABL Revolving Credit Facility, or $15.0 million. As of March 29, 2025, the Company was in compliance with these covenants.

On December 3, 2024, the Company issued $165.0 million aggregate principal amount of 5.500% Convertible Senior Notes due 2030 (the “Convertible Notes”), which amount includes the additional Convertible Notes issued pursuant to the initial purchasers’ full exercise of their option to purchase additional Convertible Notes. The Convertible Notes bear interest at a rate of 5.500% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2025. The Convertible Notes will mature on March 15, 2030, unless earlier converted, redeemed or repurchased. The initial conversion rate is 43.6814 shares of common stock per $1,000 principal amount of Convertible Notes, which represent the initial conversion price of $22.89 per share. The Convertible Notes are convertible at the option of the holders at any time on or after December 15, 2029, until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company will satisfy its conversion obligations by paying and/or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election. Beginning March 20, 2028, if the Company’s stock price has been at least 130% of the conversion price for a specified period of time, the Convertible Notes may be called at the option of the issuer. Under the same conditions, the Company can elect to redeem the Convertible Notes for cash. After the first quarter of 2025, if the Company’s stock price has been at least 130% of the conversion price for 20 of 30 trading days ending on and including the last trading day of the immediately preceding quarter, the Convertible Notes may be called at the option of the holder. The fair value of the Convertible Notes was approximately $228.4 million and $176.9 million as of March 29, 2025 and December 31, 2024, respectively, based on quoted prices for these instruments in active markets, and is classified as a Level 1 measurement within the fair value hierarchy.

Interest expense was approximately $3.2 million and $5.8 million during the three months ended March 29, 2025 and March 30, 2024, respectively. The Company entered into a $90.0 million Term Loan Facility on January 19, 2023, and paid interest at a rate equal to SOFR (which was required to be at least