Derivative Financial Instruments

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The following table summarizes the notional values related to the Company’s derivative instruments outstanding at March 31, 2024 (in thousands):


	March 31, 2024
Interest rate swaps (1)	$	238,850

(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 March 31, 2024 and December 31, 2023 (in thousands):


	March 31, 2024		December 31, 2023
Cash flow hedges
Current assets	$	3,194	$	2,653
Non-current assets		1,217		548
Current liabilities		—		(14	)
Non-current liabilities		—		(1,779	)
Net derivative assets	$	4,411	$	1,408

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 and non-current portions of derivative liabilities are included within accrued liabilities and other liabilities and other long-term liabilities, respectively, 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 SOFR-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).

•

In 2023, the Company entered into long-term interest rate swap agreements with multiple major financial institutions. This arrangement is used to hedge the variability of the interest payments/interest risk on the Term Loan Facility (as defined herein) and will expire in March 2027. In the fourth quarter of 2023, we paid down a portion of the principal outstanding on the Term Loan Facility and a proportionate amount of the interest rate swaps was settled.

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 months ended March 31, 2024 and 2023 (in thousands):


Derivatives Designated in		Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
Cash Flow Hedging		For the three months ended March 31,
Relationship		2024		2023
Interest rate swaps		$	4,151	$	389

Derivatives Designated in		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Cash Flow Hedging	Location of Gain (Loss) Reclassified from	For the three months ended March 31,
Relationship	Accumulated Other Comprehensive Income into Income	2024		2023
Interest rate swaps	Interest expense	$	1,163	$	497

The amount of gain (loss) recognized in other comprehensive income as of March 31, 2024 and expected to be reclassified within the next 12 months is $3.2 million.