Derivative Financial Instruments

6 Months Ended

Jun. 30, 2024

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

12.DERIVATIVE FINANCIAL INSTRUMENTS

The Company recognizes all derivatives on the Condensed Consolidated Balance Sheets at fair value. All of the Company’s derivatives have been designated as cash flow hedges; therefore, the gain or loss on the derivatives will be recognized in accumulated other comprehensive income (loss) (“AOCIL”) and reclassified into earnings in the same period during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item.  The Company classifies cash inflows and outflows from derivatives within operating activities on the Condensed Consolidated Statements of Cash Flows.

One of the Company’s objectives for utilizing derivative instruments is to reduce its exposure to fluctuations in cash flows due to changes in the variable interest rates of certain borrowings under the Revolving Credit Agreement. The Company’s strategy to achieve that objective involves entering into interest rate swaps. The interest rate swaps outstanding at June 30, 2024 were specifically designated to the Revolving Credit Agreement and accounted for as cash flow hedges.

At June 30, 2024, the Company’s derivative instruments included four interest rate swap agreements as follows:

			Fixed		Variable
	Notional		Interest		Interest Rate
Date Entered	Amount		Rate Paid (a)		Received	Effective Date (b)	Expiration Date
August 2017	$	200,000	2.1230	%	1-month Term SOFR	November 2022	October 2025
June 2018	$	200,000	2.8480	%	1-month Term SOFR	November 2022	October 2025
June 2018	$	200,000	2.8284	%	1-month Term SOFR	November 2022	October 2025
December 2018	$	200,000	2.7715	%	1-month Term SOFR	November 2022	July 2027

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(a)Plus applicable margin.

(b)In October 2022, the Company amended the reference rate in all of its outstanding interest rate swap contracts to replace One-Month LIBOR with One-Month Term SOFR and certain credit spread adjustments. The Company did not record any gains or losses upon the conversion

of the reference rates in these interest rate swap contracts, and the Company believes these amendments will not have a material impact on its Condensed Consolidated Financial Statements.

The fair values of derivative instruments designated as cash flow hedges at June 30, 2024, were as follows:

Derivatives Designated as Cash	Asset Derivatives			Liability Derivatives
Flow Hedges	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate swaps	Prepaid expenses and other current assets(a)	$	18,473	Accrued liabilities	$	—
	Other assets, net		7,301
Total derivatives designated as cash flow hedges		$	25,774		$	—

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(a)Represents the estimated amount of the existing unrealized gains on interest rate swaps at June 30, 2024 (based on the interest rate yield curve at that date), included in AOCIL expected to be reclassified into pre-tax earnings within the next 12 months. The actual amounts reclassified into earnings are dependent on future movements in interest rates.

The fair values of derivative instruments designated as cash flow hedges at December 31, 2023, were as follows:

Derivatives Designated as Cash	Asset Derivatives			Liability Derivatives
Flow Hedges	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate swaps	Prepaid expenses and other current assets	$	15,842	Accrued liabilities	$	—
	Other assets, net		6,945
Total derivatives designated as cash flow hedges		$	22,787		$	—

The following tables summarize the impact of the Company’s cash flow hedges on the results of operations, comprehensive income (loss) and AOCIL for the three and six months ended June 30, 2024 and 2023:

Derivatives					Statement of	Amount of (Gain) or Loss Reclassified
Designated as Cash	Amount of Gain or (Loss) Recognized				Net Income	from AOCIL into Earnings,
Flow Hedges	as AOCIL on Derivatives, Net of Tax (a)				Classification	Net of Tax (b)
	Three Months Ended					Three Months Ended
	June 30,					June 30,
	2024		2023			2024		2023
Interest rate swaps	$	2,808	$	12,120	Interest expense	$	(3,984)	$	(3,494)

Derivatives					Statement of	Amount of (Gain) or Loss Reclassified
Designated as Cash	Amount of Gain or (Loss) Recognized				Net Income	from AOCIL into Earnings,
Flow Hedges	as AOCIL on Derivatives, Net of Tax (a)				Classification	Net of Tax (b)
	Six Months Ended					Six Months Ended
	June 30,					June 30,
	2024		2023			2024		2023
Interest rate swaps	$	10,137	$	9,695	Interest expense	$	(7,942)	$	(6,493)

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(a)In accordance with the derivatives and hedging guidance, the changes in fair values of interest rate swaps have been recorded in equity as a component of AOCIL. As the critical terms of the interest rate swaps match the underlying debt being hedged, all unrealized changes in fair value are recorded in AOCIL.

(b)Amounts reclassified from AOCIL into earnings related to realized gains and losses on interest rate swaps are recognized when interest payments or receipts occur related to the swap contracts, which correspond to when interest payments are made on the Company’s hedged debt.

See Note 16 for further discussion on the impact of the Company’s hedge accounting to its consolidated comprehensive income (loss) and AOCIL.