Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We have evaluated the information required under this Item that was disclosed in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2025, and we believe there has been no material change to that information, except the interest rate risk noted below:
Interest Rate Risk
As of March 31, 2026, borrowings under the Company’s Credit Facility bear interest at either term SOFR or a base rate, in each case, plus an applicable margin based upon the Company’s consolidated net leverage ratio, and, in the case of term SOFR, a spread adjustment equal to 0.10% per annum. As a result of the variable interest rates applicable under the Credit Facility, if interest rates rise significantly, the cost of debt to the Company will increase. This may have an adverse effect on the Company, depending on the extent of the Company’s borrowings outstanding throughout a given year.
As of March 31, 2026, and December 31, 2025, the Company had outstanding borrowings under the Credit Facility of approximately $861.8 million and $859.7 million, respectively. The interest rate applicable on outstanding borrowings under the Credit Facility was approximately 4.7% as of both March 31, 2026, and December 31, 2025, respectively. An interest rate change of 100 basis points would result in an approximate $2.2 million and $8.6 million increase or decrease to interest expense for the three months ended March 31, 2026, and year ended December 31, 2025, respectively.
From 2023 until the first quarter of 2026, the Company had interest rate swaps in place to convert a portion of the Company's variable rate borrowings under the Credit Facility to a fixed rate exposure. In March 2026, these interest rate swap contracts expired. In April 2026, the Company further amended its Credit Facility. In April 2026, the Company entered into $400.0 million notional amounts of four-year interest rate swaps, converting a portion of the Company’s variable rate borrowings into an average fixed rate of 3.58% plus the applicable margin.
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