FAIR VALUE OF FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE DISCLOSURES

12 Months Ended

Dec. 31, 2025

FAIR VALUE OF FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE DISCLOSURES [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE DISCLOSURES

NOTE 7 — FAIR VALUE OF FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE DISCLOSURES:

The estimated fair values of the Company’s financial instruments, other than derivatives that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, at December 31, 2025 and 2024 are as follows:

(Dollars in thousands)	December 31, 2025		December 31, 2024		Fair Value Level
Cash and cash equivalents	$	116,922	$	157,506		Level 1
Short-term investments(1)		50,000		—		Level 1
2030 Bonds		(249,748)		—		Level 1
ECA Credit Facility		(81,494)		—		Level 2
$500 Million Revolving Credit Facility(2)		—		(144,581)		Level 2
Ocean Yield Lease Financing(2)		—		(282,627)		Level 2
BoComm Lease Financing(3)		(174,713)		(188,370)		Level 2
Toshin Lease Financing(3)		(10,151)		(11,662)		Level 2
Hyuga Lease Financing(3)		(10,164)		(11,776)		Level 2
Kaiyo Lease Financing(3)		(9,485)		(10,554)		Level 2
Kaisha Lease Financing(3)		(8,921)		(10,656)		Level 2

(1) Short-term investments consist of time deposits with original maturities of between 91 and 180 days.

(2) Floating rate debt – the fair value of floating rate debt has been determined using level 2 inputs and is considered to be equal to the carrying value since it bears a variable interest rate, which is reset every three months.

(3) Fixed rate debt – the fair value of fixed rate debt has been determined using level 2 inputs by discounting the expected cash flows of the outstanding debt.

Derivatives

The Company uses interest rate caps, collars and swaps for the management of interest rate risk exposure associated with changes in SOFR interest rate payments due on its credit facilities.

On June 2, 2022, the Company entered into amortizing interest rate swap agreements covering a notional amount of $475 million of the then $750 Million Facility Term Loan (now $500 Million Revolving Credit Facility) with major financial institutions participating in such facility that effectively converts the Company’s interest rate exposure from a three-month SOFR floating rate to a fixed rate of

2.84% through the maturity date of February 22, 2027, effective August 22, 2022. The interest rate swap agreements, which contain no leverage features, are designated and qualify as cash flow hedges. The outstanding unamortized notional amount of these interest rates swaps was $118.5 million as of December 31, 2025 covering for accounting purposes the $81.5 million principal balance outstanding under the ECA Credit Facility and expected further drawdowns of variable-rate debt outstanding under the ECA Credit Facility (in connection with the delivery of the four remaining LR1 newbuilds) of at least the designated notional amount of the interest rate swaps through to the maturity date of the interest rate swaps.

Terminated Derivatives

In November 2021, in connection with the refinancing of one of its then outstanding credit facilities, the Company terminated its amended interest rate swap agreement providing for a fixed-three month LIBOR rate of 2.5%, originally scheduled to expire on December 21, 2027, with a cash payment of $11.7 million. The amended interest rate swap agreement did not in its entirety meet the definition of a derivative instrument because of its off market fixed rate at inception and was deemed to be a hybrid instrument with a financing component and an embedded at-the-market derivative. Such embedded derivative was bifurcated and accounted for separately in the same manner as the Company’s other derivatives. The financing component was recorded in current and noncurrent other liabilities on the consolidated balance sheets at amortized cost. Due to an other-than-insignificant financing element on a portion of such hybrid instrument, the cash flows associated with this hybrid instrument were classified as financing activities in the consolidated statement of cash flows. Upon termination, a $4.2 million loss related to the extinguishment of the financing component of the hybrid instrument was recognized in other expense in the accompanying consolidated statement of operations for the year ended December 31, 2021 and a $4.1 million loss associated with the embedded derivative component of the hybrid instrument remained in accumulated other comprehensive income/(loss) to be released into earnings as the forecasted interest accrual transactions either affect earnings or become not probable of occurring. Approximately $0.5 million of gain, $1.7 million of loss, and $2.0 million of loss were released to interest expense in the accompanying consolidated statement of operations for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, approximately $0.9 million in gain from previously terminated interest rate swaps is expected to amortize out of accumulated other comprehensive loss to earnings within the next 12 months.

In May 2022, in connection with the refinancing of certain of the Company’s debt facilities, the Company terminated all of its existing in-the-money LIBOR based interest swaps with an aggregate notional amount of approximately $358.6 million and received net cash proceeds of approximately $9.6 million. Upon termination, a $9.7 million gain associated with the swaps remained in accumulated other comprehensive income to be released into earnings as the forecasted interest accrual transactions either affect earnings or become not probable of occurring. Approximately $0.1 million, $2.5 million and $4.1 million of this gain was released to interest expense in the accompanying consolidated statement of operations for the years ended December 31, 2025, 2024 and 2023, respectively, and the swaps are fully amortized as of December 31, 2025.

Tabular disclosure of derivatives location

Derivatives are recorded on a net basis by counterparty when a legal right of offset exists. The Company had the following amounts recorded on a net basis by transaction in the accompanying consolidated balance sheets related to the Company’s use of derivatives as of December 31, 2025 and 2024:

Fair Values of Derivative Instruments:

(Dollars in thousands)	Current portion of derivative asset		Long-term derivative assets		Other receivables
December 31, 2025:
Derivatives designated as hedging instruments:
Interest rate swaps	$	406	$	5	$	139
Total	$	406	$	5	$	139
December 31, 2024:
Derivatives designated as hedging instruments:
Interest rate swaps	$	2,080	$	801	$	453
Total	$	2,080	$	801	$	453

The following tables present information with respect to gains and losses on derivative positions reflected in the consolidated statements of operations or in the consolidated statements of other comprehensive income.

The effect of cash flow hedging relationships recognized in other comprehensive income excluding amounts reclassified from accumulated other comprehensive income/(loss), including hedges of equity method investees, for the three years ended December 31, 2025 follows:

(Dollars in thousands)	2025		2024		2023
Derivatives designated as hedging instruments:
Interest rate swaps	$	104	$	3,532	$	3,187
Total other comprehensive income	$	104	$	3,532	$	3,187

The effect of the Company’s cash flow hedging relationships on the consolidated statement of operations for the three years ended December 31, 2025 is shown below:

(Dollars in thousands)	2025		2024		2023
Derivatives designated as hedging instruments:
Interest rate swaps	$	(2,575)	$	(6,885)	$	(8,601)
Discontinued hedging instruments:
Interest rate swap		(612)		(820)		(2,149)
Total interest income	$	(3,187)	$	(7,705)	$	(10,750)

See Note 12, “Accumulated Other Comprehensive Income/(loss),” for disclosures relating to the impact of derivative instruments on accumulated other comprehensive loss.

Fair Value Hierarchy

The following table presents the fair values, which are pre-tax, for assets and liabilities measured on a recurring basis (excluding investments in affiliated companies):

(Dollars in thousands)	December 31, 2025		December 31, 2024		Fair Value Level
Derivative Assets (interest rate swaps)	$	550	$	3,334		Level 2(1)

(1) Fair values are derived using valuation models that utilize the income valuation approach. These valuation models take into account contract terms such as maturity, as well as other inputs such as interest rate yield curves and creditworthiness of the counterparty and the Company.