Derivative Instruments |
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Jun. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments | Note 11. Derivative Instruments The Company is exposed to certain risks during the normal course of its business arising from adverse changes in interest rates. The Company selectively uses derivative financial instruments (“derivatives”), including interest rate swaps, to manage interest rate risk. The Company does not hold or issue derivative instruments for speculative purposes. Fluctuations in interest rates can be volatile, and the Company’s risk management activities do not totally eliminate these risks. Consequently, these fluctuations could have a significant effect on the Company’s financial results. The Company’s exposure to interest rate risk results primarily from its variable rate borrowings. At various points during the first quarter of 2024, the Company entered into five separate pay-fixed interest rate swap agreements for a notional amount of $100.0 million each. The company elected not to use hedge accounting treatment for these instruments. As of June 30, 2025, the Company is the fixed rate payor on five interest rate swap contracts that effectively fix the SOFR-based index used to determine the interest rates charged on a portion of the Company’s total long-term debt of $1,045.1 million, not including unamortized debt issuance costs and discount. These contracts fix the Company’s term loan variable rate exposure at an average of 4.3% and have expiration dates of February and March 2027. The Company accounts for each agreement on a fair value basis at each reporting period. The following table summarizes the notional amounts and fair values of the Company’s outstanding derivatives by risk category and instrument type within the unaudited condensed consolidated balance sheet as of June 30, 2025.
The Company recognized the change in fair value of $0.6 million, with deminimus cash settlements, in interest expense in the condensed consolidated income statement related to these agreements for the three months ended June 30, 2025. The Company recognized the change in fair value of ($1.8) million, offset by cash receipts of $1.2 million, in interest expense in the condensed consolidated income statement related to these agreements for the three months ended June 30, 2024. The Company recognized the change in fair value of $3.4 million, with deminimus cash settlements, in interest expense in the condensed consolidated income statement related to these agreements for the six months ended June 30, 2025. The Company recognized the change in fair value of ($0.7) million, offset by cash receipts of $1.6 million, in interest expense in the condensed consolidated income statement related to these agreements for the six months ended June 30, 2024. See additional disclosure information related to these derivative instruments in Note 10 – Fair Value Measurements. |
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