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Note 9 - Derivatives

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Derivatives and Fair Value [Text Block]

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 $23.1 million as of September 30, 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 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 September 30, 2024 and December 31, 2023:

(in thousands)				September 30, 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		$	23,062			$	(223	)		$	27,375			$	(199	)

(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								Nine Months Ended
Derivatives Qualifying as Hedges, net of tax (in thousands)		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
(Loss) gain recognized in OCI on derivatives (effective portion)		$	(257	)		$	117			$	(24	)		$	126
Gain reclassified from accumulated OCI to interest expense			42				46				133				72

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- Definition

The entire disclosure for derivatives and fair value of assets and liabilities.

+ References

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

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 820
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/820/tableOfContent

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