Derivative Financial Instruments

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

NOTE 10 — Derivative Financial Instruments

The Company has a receive-variable (Receive Leg), pay-fixed (Pay Leg) interest rate swap with JPMorgan Chase Bank, N.A. The interest rate swap has a notional amount of $70 million and hedges interest rate risk on the term loan under the 2022 Credit Facility. The interest rate swap matures on February 28, 2027 and has a fixed rate of 2.67% per annum for the Pay Leg. The variable rate on the Receive Leg of the interest rate swap is the one-month adjusted term SOFR plus an applicable margin. As of December 31, 2023, the one-month adjusted term SOFR was 5.36%.

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 December 31, 2023, the Company expects to reclassify a gain of approximately $1.4 million from AOCI to earnings within the next twelve months.

Designated as a Level 2 instrument within the fair value hierarchy, the fair value and effect of the derivative instrument included in the Company’s consolidated financial statements was as follows:


(in thousands)	Balance Sheet Classification	December 31, 2023		December 31, 2022
Derivative instrument designated as cash flow hedge:
Interest rate swap contract	Prepaid expenses and other current assets	$	1,371	$	1,457
	Other long-term assets	837		1,706
Total derivative instrument designated as cash flow hedge		$	2,208	$	3,163


		Year Ended December 31,
(in thousands)	Financial Statements Classification		2023		2022
Derivative instrument designated as cash flow hedge:
Income recognized in other comprehensive income (loss) before reclassifications	Statement of Comprehensive Income (Loss)		$	954	$	2,966
Reclassification from accumulated other comprehensive income to earnings for the effective portion	Statement of Operations - Interest expense, net		$	(1,692)	$	215
Income tax expense	Statement of Operations - Income tax expense		$	(10)	$	(273)

There were no changes to the interest rate swap contract resulting from the amendment to the Company’s 2022 Credit Facility as discussed in NOTE 9 — Debt.