DERIVATIVES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DERIVATIVES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DERIVATIVES |
Interest Rate Swaps We entered into interest rate swap agreements to hedge forecasted monthly interest rate payments on our floating rate debt. Under the terms of the interest rate swap agreements (“Swap Agreements”), we receive payments based on the 1-month SOFR (3.72% as of December 31, 2025). We had the following Swap Agreements as of December 31, 2025:
During the year ended December 31, 2025, there were no Swap Agreements that expired. We designated the Swap Agreements as cash flow hedges. A portion of the amount included in accumulated other comprehensive (loss) income is reclassified into interest expense, net as a yield adjustment as interest is either paid or received on the hedged debt. The fair value of our Swap Agreements is based upon Level 2 inputs. We have considered our own credit risk and the credit risk of the counterparties when determining the fair value of our Swap Agreements. It is our policy to execute such instruments with creditworthy banks and not to enter into derivative financial instruments for speculative purposes. We believe our interest rate swap counterparty will be able to fulfill their obligations under our agreements, and we believe we will have debt outstanding through the expiration date of the swap agreements such that the occurrence of future cash flow hedges remains probable. The estimated fair value of our Swap Agreements in the consolidated balance sheets was as follows:
A cumulative gain, net of tax, of $431 and $2,917 is recorded in accumulated other comprehensive (loss) income as of December 31, 2025 and 2024, respectively. The amount of gain, net of tax, recognized in other comprehensive income for the years ended December 31, 2025, 2024 and 2023 was $722, $1,821 and $6,444, respectively. There was a gain, net of tax, of $2,626, $3,261 and $618 reclassified from accumulated other comprehensive income (loss) into earnings for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, approximately $652 is expected to be reclassified from accumulated other comprehensive income (loss) into interest expense over the next twelve months. Foreign Currency Hedge We entered into forward contracts to hedge forecasted Mexican Peso (“MXN”) denominated costs associated with our Mexican subsidiary. These contracts are designated as cash flow hedges to manage foreign currency transaction risk and are measured at fair value and reported as current assets or current liabilities in the consolidated balance sheets. Any changes in the fair value of designated cash flow hedges are recorded in other comprehensive income (loss) and are reclassified from accumulated other comprehensive income (loss) into earnings in the period the hedged item impacts earnings. As of December 31, 2025, the Company had outstanding contracts with a total notional amount of $125,063 MXN and recognized a cumulative loss, net of tax, in accumulated other comprehensive income (loss) of $125 and $314 as of December 31, 2025 and 2024, respectively. The Company recognized a gain, net of tax, of $438 and $314 in other comprehensive income (loss) for the years ended December 31, 2025 and 2024, respectively. There was a gain, net of tax, of $1 and $— reclassified from accumulated other comprehensive income (loss) into earnings for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, approximately $125 is expected to be reclassified from accumulated other comprehensive income (loss) into earnings over the next twelve months. |
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