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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended
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Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES RISK MANAGEMENT OBJECTIVE AND STRATEGY We are exposed to market risk from changes in benchmark interest rates on our variable-rate term loans. To manage this exposure, we use variable-to-fixed interest rate swaps designated as cash flow hedges to convert floating-rate interest payments into fixed rate payments and reduce the variability of cash flows attributable to interest rate movements. We do not use derivative financial instruments for speculative or trading purposes. As of March 31, 2026, all outstanding derivatives are interest rate swaps designated as cash flow hedges. POTLATCHDELTIC MERGER — ACQUIRED HEDGING INSTRUMENTS In connection with the January 30, 2026 merger with PotlatchDeltic, we acquired 18 pay-fixed / receive-floating interest rate swaps with an aggregate notional amount of $1,037.0 million (the “PotlatchDeltic Merger Swaps”). One swap with a notional amount of $27.5 million matured on February 1, 2026, leaving 17 swaps with an aggregate notional amount of $1,009.5 million outstanding as of March 31, 2026. The acquired swaps were recorded at fair value on the acquisition date and concurrently re-designated as cash flow hedges of forecasted variable-rate interest payments on the assumed loans under our Second Amended and Restated Credit Agreement. The acquisition-date fair value is being amortized to interest expense over the remaining swap terms, such that hedge accounting reflects only changes in fair value subsequent to re-designation in accumulated other comprehensive income (“AOCI”). All re-designated hedging relationships were determined to be highly effective as of January 30, 2026 and as of March 31, 2026. ACCOUNTING FOR DERIVATIVES We record derivatives as assets or liabilities in the Consolidated Balance Sheets in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”). Gains and losses on derivatives designated and qualifying as cash flow hedges are recorded in AOCI and reclassified into earnings when the hedged transaction affects earnings. For derivatives not designated as hedges, changes in fair value are recognized immediately in earnings. Upon de-designation, the AOCI balance is reclassified into earnings over the original term of the forecasted transaction if the transaction remains probable, or immediately if probability is no longer met. As of March 31, 2026, all outstanding derivative instruments qualify for hedge accounting. INTEREST RATE SWAPS The hedged forecasted transactions are the monthly variable-rate interest payments on the Company’s combined post-merger loan portfolio, assessed on an aggregate basis for purposes of the ASC 815-20 notional adequacy (over-hedging) assessment. As of March 31, 2026, we are hedging exposure to variability in future cash flows on forecasted interest payments over a maximum period of approximately nine years. The following table contains information on the outstanding interest rate swaps as of March 31, 2026:
Outstanding Interest Rate Swaps (a)
Date Entered Into / Acquired | Years to Maturity | Notional Amount | Related Debt Facility | Fixed Rate of Swap | Bank Margin on Debt | Total Effective Interest Rate (b)
Hedging Instruments
April 2016 | < 1 year | $100,000 |  | 2016 Incremental Term Loan | 1.50 | % | 1.75 | % | 3.25 | %
April 2016 | < 1 year | 100,000 |  | 2016 Incremental Term Loan | 1.51 | % | 1.75 | % | 3.26 | %
February 2022 | 3 years | 200,000 |  | 2021 Incremental Term Loan | 0.67 | % | 1.92 | % | 2.59 | %
August 2024 | 2 years | 100,000 |  | 2015 Term Loan | 0.78 | % | 1.60 | % | 2.38 | %
August 2024 | 2 years | 50,000 |  | 2015 Term Loan | 0.64 | % | 1.60 | % | 2.24 | %
August 2024 | 2 years | 50,000 |  | 2015 Term Loan | 3.29 | % | 1.60 | % | 4.89 | %
Hedging Instruments Acquired in the PotlatchDeltic Merger (January 30, 2026)
January 2026 | 1 year | 138,750 |  | Term Loan Q | 0.50 | % | 2.00 | % | 2.50 | %
January 2026 | 2 years | 65,000 |  | Term Loan K | 2.79 | % | 1.94 | % | 4.73 | %
January 2026 | 2 years | 35,000 |  | Term Loan L | 2.79 | % | 1.94 | % | 4.73 | %
January 2026 | 3 years | 150,000 |  | Term Loan M | 0.43 | % | 1.60 | % | 2.03 | %
January 2026 | 4 years | 40,000 |  | Term Loan N | 1.26 | % | 1.59 | % | 2.85 | %
January 2026 | 4 years | 138,750 |  | Term Loan R | 0.66 | % | 2.00 | % | 2.66 | %
January 2026 | 5 years | 23,000 |  | Term Loan O | 0.87 | % | 2.18 | % | 3.05 | %
January 2026 | 5 years | 23,000 |  | Term Loan O | 0.87 | % | 2.18 | % | 3.05 | %
January 2026 | 6 years | 20,000 |  | Term Loan P | 0.93 | % | 2.10 | % | 3.03 | %
January 2026 | 6 years | 20,000 |  | Term Loan P | 0.93 | % | 2.10 | % | 3.03 | %
January 2026 | 7 years | 20,000 |  | Term Loan S | 0.98 | % | 2.30 | % | 3.28 | %
January 2026 | 7 years | 20,000 |  | Term Loan S | 0.97 | % | 2.30 | % | 3.27 | %
January 2026 | 7 years | 38,000 |  | Term Loan U | 1.82 | % | 2.20 | % | 4.02 | %
January 2026 | 8 years | 38,000 |  | Term Loan V | 2.02 | % | 2.25 | % | 4.27 | %
January 2026 | 8 years | 40,000 |  | Term Loan T | 1.05 | % | 2.30 | % | 3.35 | %
January 2026 | 9 years | 100,000 |  | Term Loan W | 1.98 | % | 2.30 | % | 4.28 | %
January 2026 | 9 years | 100,000 |  | Term Loan X | 1.81 | % | 2.30 | % | 4.11 | %
Total Notional |  | $1,609,500 |  |  |  |  |
(a)All interest rate swaps are designated as cash flow hedges and qualify for hedge accounting. (b)Rate is before estimated patronage payments. IMPACT ON THE CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) The following table presents the pre-tax impact of our derivatives on the Consolidated Statements of Income and Comprehensive Income (Loss) for the three months ended March 31, 2026 and 2025:
|  |  |  |  | Three Months Ended March 31,
| Income Statement Location |  |  |  |  |  | 2026 |  | 2025
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |  |
Interest rate products | Other comprehensive income (loss), relating to continuing operations |  |  |  |  |  | $6,282 |  |  | ($4,247) |
| Interest expense, net |  |  |  |  |  | (4,010) |  |  | (4,511) |
| Total interest expense, net, as reported on the Consolidated Statements of Income and Comprehensive Income (Loss) |  |  |  |  |  | (14,301) |  |  | (6,394) |
AMOUNT EXPECTED TO BE RECLASSIFIED FROM AOCI INTO EARNINGS IN THE NEXT 12 MONTHS During the next 12 months, the amount of the AOCI balance, net of tax, expected to be reclassified into earnings is a gain of approximately $12.7 million. These reclassified amounts are expected to offset variable interest rate payments to debt holders, resulting in no net impact on our earnings or cash flows. NOTIONAL AMOUNTS The following table contains the notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheets at March 31, 2026 and December 31, 2025:
| Notional Amount |
| March 31, 2026 |  | December 31, 2025 |
Derivatives designated as cash flow hedges: |  |  |  |
Interest rate swaps (a) | $1,609,500 |  |  | $600,000 |  |
(a) The period-over-period increase in notional outstanding of $1,009,500 is attributable to the 17 PotlatchDeltic Merger Swaps re-designated as cash flow hedges on January 30, 2026. FAIR VALUES
The following table contains the fair values of the derivative financial instruments recorded in the Consolidated Balance Sheets at March 31, 2026 and December 31, 2025. The Company classifies the fair value of its derivative instruments as current or non-current based on the contractual settlement timing of each individual derivative:
| Location on Balance Sheet |  | Fair Value Assets (Liabilities) (a)
|  |  | March 31, 2026 |  | December 31, 2025
Derivatives designated as cash flow hedges: |  |  |  |
Interest rate swaps |  |  |  |  |
| Other current assets |  | $356 |  |  | $1,404 |
| Other assets |  | 124,515 |  |  | 25,438 |
Total derivative assets |  |  | $124,871 |  |  | $26,842 |
| Other non-current liabilities |  | — |  |  | ($23) |
Total derivative liabilities |  |  | — |  |  | ($23) |
(a) See Note 10 — Fair Value Measurements for further information on the fair value of our derivatives including their classification within the fair value hierarchy. OFFSETTING DERIVATIVES We present derivative financial instruments at their gross fair values in the Consolidated Balance Sheets. Our derivatives are not subject to master netting arrangements that permit a right of offset, and no collateral has been received from, or pledged to, counterparties under any of the outstanding interest rate swap agreements. CREDIT RISK CONTINGENT FEATURES Our interest rate swap agreements are executed under ISDA Master Agreements that contain customary credit-risk-related provisions that permit the counterparty to terminate the swap and require settlement at the net liability position upon a default on our underlying senior indebtedness. As of March 31, 2026, no derivative instruments containing such features were in a net liability position. COUNTERPARTY CREDIT RISK Counterparties to the Company's interest rate swap agreements are investment-grade commercial banks and Farm Credit System institutions, and the Company monitors counterparty credit quality on an ongoing basis. The Company does not consider its exposures to any individual counterparty to represent a significant concentration of credit risk.

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