Derivatives |
6 Months Ended |
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Jun. 30, 2026 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Derivatives | 8. DERIVATIVES Prior to the January 1, 2026 adoption of ASU 2025-07, the Company reflected on its balance sheet an embedded derivative resulting from certain features in the Company’s 2024 Debt Repayment. As of December 31, 2025, the fair value of the embedded derivative was $114.5 million. This derivative instrument was not designated as a hedge. The fair value of the embedded derivative was marked-to-market at the end of each reporting period, or more frequently as deemed necessary, with any changes in value reported in the consolidated statements of operations and consolidated statements of cash flows as a non-cash operating activity. The terms of the 2024 Debt Repayment contain an interest reduction mechanism that was required to be bifurcated and, prior to the adoption of ASU 2025-07, was recorded as an embedded derivative on the Company's consolidated balance sheet with a corresponding debt premium that was added to the principal amount of the 2024 Debt Repayment. The Company determined the fair value of the embedded derivatives using a discounted cash flow model. As the discount yield and the effective interest rate of the loan fluctuated based on projected cash flows, the derivative value was adjusted. When project milestones (as amended in April 2026) were achieved, the Company removed associated future cash flows from the total interest savings projections used to fair value the embedded derivative. The majority of the present value of the cash flows removed from the derivative asset was recorded as a debt discount, while the remaining portion relieved the balance of accrued interest associated with that milestone on the Company's consolidated balance sheet. Effective January 1, 2026, the Company early adopted ASU 2025-07 using the modified retrospective approach. As discussed in Note 7: Long-Term Debt and Other Financing Arrangements, the 2024 Debt Repayment accrues annual fees, which may be reduced or eliminated entirely if the Company meets certain defined milestones associated with the completion of the Extended MSS Network. This interest reduction mechanism is an underlying to this agreement, which is now included in the scope exceptions permitted under ASC 815 and no longer requires bifurcation. Upon adoption, the net impact of the previously recognized derivative asset of $114.5 million and associated debt premium, net of accretion, of $86.1 million totaled $28.4 million and was derecognized. The total amount derecognized upon adoption was recorded as a cumulative catch up to retained earnings on the Company's consolidated balance sheets during the second quarter of 2026. The $2.6 million derivative loss resulting from the mark-to-market adjustment recorded during the first quarter of 2026 was reclassified back to the derivative asset and was included in the cumulative retained earnings adjustment in connection with the adoption of this standard. Prior period financial statements are presented under the previously applicable guidance and are not directly comparable to the current period amounts. Upon adoption, the embedded derivative no longer requires mark-to-market accounting on a quarterly basis. The previous mark-to-market adjustments were reflected in "Derivative gain and other income" in the Company’s consolidated statement of operations. See Note 9: Fair Value Measurements for further discussion.
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