Derivatives

9 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company utilizes derivative financial instruments to manage interest rate risk related to its variable rate debt. The Company’s objectives in using these interest rate derivatives, which were designated as cash flow hedges, are to manage its exposure to interest rate movements and reduce volatility of interest expense. The aggregate notional amount of all interest rate swap agreements was $550.0 million as of December 31, 2022. The swaps have staggered maturities, ranging from June 30, 2023 to June 30, 2025.

The floating-to-fixed interest rate swaps involve the exchange of variable interest amounts from a counterparty for the Company making fixed-rate interest payments over the life of the agreements without exchange of the underlying notional amount and effectively convert a portion of the variable rate debt into fixed interest rate debt.

Derivative instruments are recorded in the condensed consolidated balance sheet on a gross basis at estimated fair value. As of December 31, 2022, $11.5 million and $6.5 million, were classified as other current assets and other long-term assets, respectively, on the condensed consolidated balance sheet. As of March 31, 2022, $4.1 million, $4.3 million and $39 thousand were classified as other long-term assets, other current liabilities, and other long-term liabilities, respectively, on the condensed consolidated balance sheet.

For interest rate swaps designated as cash flow hedges, the changes in the fair value of derivatives are recorded in Accumulated Other Comprehensive Income (Loss), or AOCI, net of taxes, and is subsequently reclassified into interest expense, net in the period that the hedged forecasted interest payments are made on the Company's variable-rate debt. The effect of derivative instruments on the accompanying condensed consolidated financial statements for the three and nine months ended December 31, 2022 and 2021 is as follows:


		Three Months Ended December 31,
Derivatives in Cash Flow Hedging Relationships	Location of Gain or Loss Recognized in Income on Derivatives	Amount of Pre-Tax Gain or (Loss) Recognized in AOCI on Derivatives				Amount of Pre-Tax Gain or (Loss) Reclassified from AOCI into Income (1)
		2022		2021		2022		2021
Interest rate swaps	Interest income (expense)	$	1,565	$	5,271	$	1,648	$	(4,097)

(1) The reclassifications from accumulated other comprehensive income (loss) to net income were reduced by tax benefit (expense) of ($0.4 million) and $1.1 million for the three months ended December 31, 2022 and 2021, respectively.


		Nine Months Ended December 31,
Derivatives in Cash Flow Hedging Relationships	Location of Gain or Loss Recognized in Income on Derivatives	Amount of Pre-Tax Gain or (Loss) Recognized in AOCI on Derivatives				Amount of Pre-Tax Gain or (Loss) Reclassified from AOCI into Income (2)
		2022		2021		2022		2021
Interest rate swaps	Interest income (expense)	$	16,704	$	3,496	$	(1,571)	$	(13,627)

(2) The reclassifications from accumulated other comprehensive loss to net income was reduced by taxes of $0.4 million and $3.6 million for the nine months ended December 31, 2022 and 2021, respectively.

Over the next 12 months, the Company estimates that $11.6 million will be reclassified as a decrease to interest expense. Cash flows associated with periodic settlements of interest rate swaps will be classified as operating activities in the condensed consolidated statement of cash flows.

The Company is subject to counterparty risk in connection with its interest rate swap derivative contracts. Credit risk related to a derivative financial instrument represents the possibility that the counterparty will not fulfill the terms of the contract. The Company mitigates this credit risk by entering into agreements with credit-worthy counterparties and regularly reviews its credit exposure and the creditworthiness of the counterparties.