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Note 9 - Derivatives

3 Months Ended

Mar. 31, 2024

9.	Derivatives

In February 2023, the Company entered into an interest rate swap contract to improve the predictability of cash flows from interest payments related to its variable, SOFR-based debt. The swap contract had a notional amount of $25.9 million as of March 31, 2024 and matures on December 22, 2025. This swap contract effectively converts the SOFR-based variable portion of the interest payable under the Credit Agreement into fixed-rate debt at an annual rate of 4.75%. The swap contract does not impact the additional interest related to the applicable interest rate margin as discussed above in Note 8, Long-Term Debt. The swap contract is considered an effective cash flow hedge, and as a result, net gains or losses are reported as a component of other comprehensive income (“OCI”) in the consolidated financial statements and are reclassified as net income when the underlying hedged interest impacts earnings. An assessment is performed quarterly to evaluate the ongoing hedge effectiveness.

The following table presents the notional amount and fair value of the Company’s derivative instruments as of March 31, 2024 and December 31, 2023:

(in thousands)		March 31, 2024				December 31, 2023
Derivatives Instruments	Balance Sheet Classification	Notional Amount		Fair Value (a)		Notional Amount		Fair Value (a)
Interest rate swap	Other long-term liabilities	$	25,920	$	*	$	27,375	$	(199	)

* Amount not significant.

(a) See Note 10 for the fair value measurements related to these financial instruments.

The effect of the cash flow hedge on other comprehensive income (loss) and earnings for the periods presented was as follows:

	Three Months Ended		Three Months Ended
Derivatives Qualifying as Hedges, net of tax (in thousands)	March 31, 2024		March 31, 2023
Gain (loss) recognized in OCI on derivatives (effective portion)	$	199	$	(440	)
Gian (loss) reclassified from OCI to interest expense		47		(1	)