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Fair Value Measurements and Financial Instruments | 9 Months Ended
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Sep. 30, 2024
Financial Instruments [Abstract] |
Fair Value Measurements and Financial Instruments | Fair Value Measurements and Financial Instruments Derivative Instruments The Company may use derivative financial instruments to manage its exposure to interest rate risk. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The following sections detail the Company’s derivative financial instruments. Interest Rate Collars The Company’s variable interest rate debt creates interest rate risk. The Company has interest rate collar agreements that provide for a contractually specified interest rate cap and an interest rate floor based on SOFR. The Company receives payment from the counterparty if SOFR is greater than the cap or pays the counterparty if SOFR is below the floor. If SOFR is between the floor and cap, no payment is due to either party. There were no new interest rate collar agreements executed during the nine months ended September 30, 2024. As of September 30, 2024 and December 31, 2023, the interest rate collar agreements were classified within Long-term liabilities - Other liabilities on the Consolidated Balance Sheets for which the fair value was not material. The total notional amount of the interest rate collar agreements was $400 million as of September 30, 2024 and December 31, 2023, and these agreements mature on September 30, 2026. The fair values of the Company’s interest rate collar agreements are classified as Level 2 in the fair value hierarchy. The valuation of the interest rate collar agreements is derived using a discounted cash flow analysis on the expected cash receipts or cash disbursements that would occur if variable interest rates rise above or fall below the strike rates of the interest rate cap and interest rate floor, respectively. This analysis reflects the contractual terms of the interest rate collar agreements, including the period to maturity, and uses observable market-based inputs, including SOFR curves and implied volatilities. The Company also incorporates insignificant credit valuation adjustments to appropriately reflect the respective counterparty’s nonperformance risk in the fair value measurements. The counterparty credit spreads are based on publicly available credit information obtained from a third-party credit data provider. The interest rate collars are designated as cash flow hedges. The changes in the fair value of derivatives that qualify as cash flow hedges are recorded in Accumulated other comprehensive loss (“AOCL”) and are subsequently reclassified into Interest expense, net in the period when the hedged forecasted transaction affects earnings. During the three and nine months ended September 30, 2024 and 2023, the changes in fair value for the effective portion of the derivative financial instruments and the reclassification from AOCL to Interest expense, net were not material. Treasury Locks The Company used treasury lock agreements to manage interest rate risk in advance of the issuance of fixed rate debt. During the three months ended September 30, 2024, the Company executed and settled treasury lock agreements for a total notional value of $600 million, concurrent with the issuance of unsecured senior notes. The treasury lock agreements were settled at an immaterial loss. For additional information regarding the issuance of the unsecured senior notes, see Note 5 (Debt). The treasury lock agreements were designated as cash flow hedges. The loss on the settlement was recorded to AOCL and is subsequently reclassified into Interest expense, net over the term of the debt in the same period during which the hedged forecasted transaction affects earnings. During the three and nine months ended September 30, 2024, the reclassification from AOCL to Interest expense, net was not material. Short-term Investments Short-term investments, which have a maturity that extends beyond three months but within one year, is comprised of a certificate of deposit. As of September 30, 2024, the amortized cost of the certificate of deposit was $212 million and is classified within Short-term investments on the Consolidated Balance Sheets. The fair value of the short-term investment approximates the carrying value due to its short-term nature and is classified as a Level 2 in the fair value hierarchy.

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