Derivative Instruments and Hedging Activities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company is exposed to interest rate risk on its variable-rate borrowings under its A&R Credit Agreement. To manage a portion of this exposure, on June 10, 2026, the Company entered into three pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of $55,000 that became effective on June 30, 2026. The Company has designated each swap as a cash flow hedge of the variability in interest payments attributable to changes in one-month Term SOFR on a corresponding amount of the Company’s A&R Credit Agreement. The interest rate swaps are recorded at fair value and are adjusted to market on a quarterly basis. The entire change in fair value of each designated swap is recorded in accumulated other comprehensive income/loss (“AOCI”) and is reclassified into interest expense in the same period in which the hedged interest payments affected earnings. As of June 30, 2026, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is approximately four years (through 2030). For the quarter and year to date ended June 30,2026, the unrealized loss on interest rate swaps recognized in AOCI was $156 (net of tax expense of $52). At June 30, 2026, the amount of net gains (losses) on qualifying derivatives currently recorded in AOCI expected to be reclassified into interest expense within the next twelve months is immaterial. The aggregate notional amount of the Company’s derivative instruments designated as cash flow hedges, interest rate swaps, was $55,000 at June 30, 2026. For the quarter and year to date ended June 30, 2026, the gain (loss) recognized in AOCI reclassified into interest expense was immaterial. The following table presents the fair value of the Company’s derivative instruments and their location on the condensed consolidated balance sheets:
All derivative instruments are carried at fair value and are classified within Level 2 of the fair value hierarchy. The Company estimates the fair value of its interest rate swaps using a discounted cash flow model based on observable market inputs, including SOFR forward and discount curves, and incorporates an adjustment for nonperformance risk. As of June 30, 2026, the Company had not posted any collateral related to these instruments. If the credit risk related contingent features underlying these agreements had been triggered on June 30, 2026, the Company could have been required to settle or post collateral of up to $208. The Company’s interest rate swaps are governed by the International Swaps and Derivative Association master agreement with the counterparty, which provides for net settlement of all outstanding transactions in the event of default or termination. The Company's policy is to present its derivative assets and liabilities on a gross basis in the condensed consolidated balance sheets, and it has not offset any amounts related to its interest rate swaps. As of June 30, 2026, the gross and net amounts of the Company’s interest rate swaps subject to this enforceable master netting arrangement were the same, as reflected in the fair value table above.
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