Derivative Financial Instruments

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The following table summarizes the notional values related to the Company’s derivative instruments outstanding at September 30, 2022 (in thousands):


	September 30, 2022
Interest rate swap(1)	$	66,061

(1)

Number of open positions and gross notional values do not measure the Company’s risk of loss, quantify risk or represent assets or liabilities of the Company. Instead, they indicate the relative size of the derivative instruments and are used in the calculation of the amounts to be exchanged between counterparties upon settlements.

The following table presents the fair value of each classification of the Company’s derivative instruments designated as hedging instruments as of September 30, 2022 and December 31, 2021 (in thousands):


	September 30, 2022		December 31, 2021
Interest rate swaps – cash flow hedges
Current assets	$	406	$	—
Non-current assets		2,008		—
Current liabilities		—		(1,401	)
Non-current liabilities		—		(2,999	)
Net derivative assets (liabilities)	$	2,414	$	(4,400	)

The current and non-current portions of derivative assets are included within other current assets and other assets, respectively, on the consolidated balance sheets. The current portion of derivative liabilities is included within the accrued liabilities and other liabilities on the consolidated balance sheets.

Derivatives Accounted for as Cash Flow Hedges

The Company’s cash flow hedges include interest rate swaps that are hedges of variability in forecasted interest payments due to changes in the interest rate on LIBOR-based borrowings, a summary which includes the following designations:

•

In 2018, the Company entered into two long-term interest rate swap agreements with a major financial institution. The swaps, which became effective in October 2018 and expire in April 2030, are used to hedge approximately 70% of the variability in interest payments/interest risk on the 2017 Bank Loans (as defined herein).

The following tables present the gains and losses from the Company’s derivative instruments designated in a cash flow hedging relationship recognized in the consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2022 and 2021 (in thousands):


Derivatives Designated in Cash Flow Hedging Relationship		Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)
		For the three months ended September 30,					For the nine months ended September 30,
		2022			2021		2022			2021
Interest rate swaps		$	1,917		$	2,837	$	5,681		$	902

Derivatives Designated in Cash Flow Hedging Relationship	Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
		For the three months ended September 30,					For the nine months ended September 30,
		2022			2021		2022			2021
Interest rate swaps	Interest expense	$	(437	)	$	2,195	$	(967	)	$	(1,258	)

The amount of gain (loss) recognized in other comprehensive income as of September 30, 2022 and expected to be reclassified within the next 12 months is $0.4 million.