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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

NOTE 11 — Derivative Financial Instruments

From time to time, the Company may enter into interest rate swaps to fix a portion of interest expense. The Company does not enter into derivative instruments for any other purpose other than to manage its risks related to fluctuations in interest rates, and does not engage in interest rate speculation using derivative instruments.

As of September 30, 2022, the Company had a $70 million receive-variable, pay-fixed interest rate swap outstanding with JPMorgan Chase Bank, N.A. This interest rate swap matures on February 28, 2027 and has a fixed rate of 2.67% per annum. The variable rate on the interest rate swap is the one-month adjusted term SOFR rate plus an applicable margin. As of September 30, 2022, the one-month adjusted term SOFR rate was 3.03%.

The Company typically designates all interest rate swaps as cash flow hedges, and accordingly, records the change in fair value for the effective portion of the interest rate swap in AOCI rather than in current period earnings until the underlying hedged transaction affects earnings. As of September 30, 2022, the Company expects to reclassify a gain of approximately $1.0 million from AOCI to earnings within the next twelve months.

The fair value of the Company’s derivative instrument was included in the condensed consolidated balance sheet as follows:

(in thousands)						Balance Sheet Classification						September 30, 2022						December 31, 2021
Derivative instrument designated as cash flow hedge:
Interest rate swap contract						Prepaid expenses and other current assets						$	1,030					$	—
						Other long-term assets						2,297						—
Total derivative instrument designated as cash flow hedge												$	3,327					$	—

The effect of its derivative instrument on the Company’s condensed consolidated statements of operations was as follows:

												Three Months Ended September 30,												Nine Months Ended September 30,
(in thousands)						Statement of Operations Classification						2022						2021						2022						2021
Derivative instrument designated as cash flow hedge:
Income recognized in other comprehensive income before reclassifications												$	2,651					$	—					$	2,935					$	—
Reclassification from accumulated other comprehensive income to earnings for the effective portion						Interest expense, net						77						—						409						—
Income tax expense						Income tax expense						(244)						—						(294)						—

For additional information related to the Company’s derivative, see NOTE 2 — Basis of Presentation and Summary of Significant Accounting Policies and NOTE 10 — Fair Value Measurements.

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- References

No definition available.

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- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-URI https://asc.fasb.org/topic&trid=2229140

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 5
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008

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