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DERIVATIVES

9 Months Ended

Sep. 30, 2024

DERIVATIVES

DERIVATIVES

NOTE 12 — DERIVATIVES

The Company uses derivative instruments to manage exposures to currency exchange rates, interest rates and commodity prices arising in the normal course of business. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. Hedge ineffectiveness was immaterial in the three and nine months ended September 30, 2024 and 2023.

The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with any individual counterparty was considered significant at September 30, 2024. The Company does not expect any counterparties to fail to meet their obligations.

Cash Flow Hedges

Certain foreign currency forward contracts are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $94,030 at September 30, 2024 and $84,148 at December 31, 2023.

The Company had interest rate forward starting swap agreements that were qualified and designated as cash flow hedges that were terminated during the second quarter of 2024. At December 31, 2023, the dollar equivalent gross notional amount of the contracts was $100,000. Upon termination of the contracts in the second quarter of 2024, the Company had a gain of $25,852 recorded in AOCI that will be amortized to Interest expense, net over the life of the associated debt.

The Company has commodity contracts that are qualified and designated as cash flow hedges. The notional amount of these contracts were 25,000 pounds and 200,000 pounds at September 30, 2024 and December 31, 2023, respectively.

In March 2023, the Company entered into interest rate swap agreements, which were qualified and designated as cash flow hedges, with an aggregate notional amount of $150,000. In June 2024, the Company terminated the interest rate swaps that were associated with the Term Loan and realized a gain of $2,428, which is recorded in Other (expense) income.

Net Investment Hedges

The Company has foreign currency forward contracts that qualify and are designated as net investment hedges. The dollar equivalent gross notional amount of these contracts was $334,947 and $119,607 at September 30, 2024 and December 31, 2023, respectively.

Derivatives Not Designated as Hedging Instruments

The Company has certain foreign exchange forward contracts that are not designated as hedges. These derivatives are held as economic hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was $384,414 and $492,600 at September 30, 2024 and December 31, 2023, respectively.

Fair values of derivative instruments in the Company’s Condensed Consolidated Balance Sheets follow:


	September 30, 2024												December 31, 2023
	Other			Other									Other			Other
	Current			Current			Other			Other			Current			Current			Other			Other
Derivatives by hedge designation	Assets			Liabilities			Assets			Liabilities			Assets			Liabilities			Assets			Liabilities
Designated as hedging instruments:
Foreign exchange contracts	$	264		$	3,074		$	—		$	—		$	1,548		$	687		$	—		$	—
Interest rate swap agreements		—			—			—			—			—			—			1,460			—
Forward starting swap agreements		—			—			—			—			—			—			20,377			—
Net investment contracts		—			4,747			—			—			—			3,351			—			—
Commodity contracts		20			—			—			—			45			—			—			—
Not designated as hedging instruments:
Foreign exchange contracts		679			2,735			—			—			4,063			623			—			—
Total derivatives	$	963		$	10,556		$	—		$	—		$	5,656		$	4,661		$	21,837		$	—

The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Income consisted of the following:


				Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives by hedge designation		Classification of (loss) gain		2024			2023			2024			2023
Not designated as hedges:
Foreign exchange contracts		Selling, general & administrative expenses		$	3,108		$	(6,705)		$	(3,663)		$	5,066

The effects of designated hedges on AOCI and the Company’s Consolidated Statements of Income consisted of the following:



Total gain (loss) recognized in AOCI, net of tax		September 30, 2024			December 31, 2023
Foreign exchange contracts		$	(2,019)		$	721
Interest rate swap agreements			—			1,085
Forward starting swap agreements			18,534			14,696
Net investment contracts			4,120			7,136
Commodity contracts			15			34

The Company expects a loss of $2,004 related to existing contracts to be reclassified from AOCI, net of tax, to earnings over the next 12 months as the hedged transactions are realized.


				Three Months Ended September 30,						Nine Months Ended September 30,
		Gain (loss) recognized in the
Derivative type		Consolidated Statements of Income:		2024			2023			2024			2023
Foreign exchange contracts		Sales		$	(630)		$	1,757		$	657		$	4,847
		Cost of goods sold			40			159			524			187
Commodity contracts		Cost of goods sold			26			(3)			92			194
Forward starting swap agreements		Interest expense, net			639			—			706			—