v3.25.2
Derivative Financial Instruments
 9 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Note 11 - Derivative Financial Instruments
In the normal course of business, our operations are exposed to market risks, including the effect of changes in interest rates. We may enter into derivative financial instruments to offset these underlying market risks.
On March 31, 2023, we entered into a new interest rate swap agreement, effective April 3, 2023, with the Avondale Lender that effectively fixes the interest rate we pay on 50% of the principal amount of the Avondale Term Loan at 1.45% for the entire loan term (the “Avondale Swap”). The Avondale Swap was designated as an effective cash flow hedge for accounting and tax purposes. On April 14, 2022, in connection with the Lisle Term Loan, we entered into an interest rate swap agreement with the Lisle Lender that effectively fixes the interest rate on 50% of the principal amount of the Lisle Term Loan at 4.69% for the entire loan term, or seven years (the “Lisle Swap”). The Lisle Swap was designated as an effective cash flow hedge for accounting and tax purposes.
Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in “Accumulated other comprehensive income” on the condensed consolidated balance sheets. For cash flow hedges, we report the effective portion of the gain or loss as a component of “Accumulated other comprehensive income” and reclassify it to “Interest expense” in the condensed consolidated statements of operations over the corresponding period of the underlying hedged item. The ineffective portion of the change in fair value of a derivative financial instrument is recognized in “Interest expense” at the time the ineffectiveness occurs. To the extent the hedged forecasted interest payments on debt related to our interest rate swap is paid off, the remaining balance in “Accumulated other comprehensive income” is recognized in “Interest expense” in the condensed consolidated statements of operations. Of the net amount of the existing gains that are reported in “Accumulated other comprehensive income” as of June 30, 2025, we estimate that $0.5 million will be reclassified to “Interest expense” within the next twelve months. As of June 30, 2025, the notional amount of the Avondale Swap and Lisle Swap was approximately $13.9 million and $18.1 million, respectively.
Fair Value of Derivative Instruments
The following table presents the fair value of our Avondale Swap and Lisle Swap (Level 2) which are designated as cash flow hedges and the related classification on the condensed consolidated balance sheets as of June 30, 2025 and September 30, 2024:
Interest Rate SwapsJune 30, 2025September 30, 2024
Other current assets$486 $497 
Other assets615 726 
   Total fair value of assets designated as hedging instruments$1,101 $1,223 
Effect of Cash Flow Hedge Accounting on the Consolidated Statements of Operations and Accumulated Other Comprehensive Income
The table below presents the effect of cash flow hedge accounting for our Avondale Swap and Lisle Swap on the condensed consolidated statement of operations and “Accumulated other comprehensive income” for the three and nine months ended June 30, 2025 and 2024:
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivative, net of taxesAmount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
Three Months Ended June 30, 2025
Avondale Swap and Lisle Swap$(74)$176
Nine Months Ended June 30, 2025
Avondale Swap and Lisle Swap$471$563
Three Months Ended June 30, 2024
Avondale Swap and Lisle Swap$259$264
Nine Months Ended June 30, 2024
Avondale Swap and Lisle Swap$263$802