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Derivative Instruments and Hedging Activities | 9 Months Ended
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Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivative Transactions Designated as Hedging Instruments Cash Flow Hedges Foreign Currency Contracts The Company uses cash flow hedges to minimize the variability in cash flows of assets or liabilities or forecasted transactions caused by fluctuations in foreign currency exchange rates. The changes in the fair values of these cash flow hedges are recorded in accumulated other comprehensive loss and are subsequently reclassified into “Cost of goods sold” during the period the sales and purchases are recognized. These amounts offset the effect of the changes in foreign currency rates on the related sale and purchase transactions. The Company designates certain foreign currency contracts as cash flow hedges of expected future sales and purchases. The total notional value of derivatives that were designated as cash flow hedges was approximately $234.7 million and $262.2 million as of September 30, 2024 and December 31, 2023, respectively. Steel Commodity Contracts The Company designates certain steel commodity contracts as cash flow hedges of expected future purchases of steel. The total notional value of derivatives that were designated as cash flow hedges was approximately $0.0 million and $2.5 million as of September 30, 2024 and December 31, 2023, respectively. Interest Rate Risk The Company entered into treasury rate locks in early March 2024 to fix the interest rate for the 2034 Notes issued on March 21, 2024. The derivative position settled on March 28, 2024 with a cash settlement that offset changes in the benchmark treasury rate between the execution of the treasury rate lock and the debt pricing date for the 2034 Notes. This treasury rate lock was designated as a cash flow hedge and the gain at termination of $8.2 million was recognized in accumulated other comprehensive loss. The amount recognized in accumulated other comprehensive loss is reclassified to interest expense as interest payments are made on the 2034 Notes through the maturity date. The following tables summarize the after-tax impact that changes in the fair value of derivatives designated as cash flow hedges had on accumulated other comprehensive loss and net income (loss) during the three and nine months ended September 30, 2024 and 2023 (in millions):
|  |  | Recognized in Net Income (Loss)
Three Months Ended September 30, | Gain (Loss) Recognized in Accumulated Other Comprehensive Loss |  | Classification of Gain (Loss) |  | Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income |  | Total Amount of the Line Item in the Condensed Consolidated Statements of Operations Containing Hedge Gains (Losses)
2024 |  |  |  |  |  |  |
Foreign currency contracts(1) | $ | (0.3) |  |  | Cost of goods sold |  | $ | (1.9) |  |  | $ | 1,996.2 |
Commodity contracts(2) | — |  |  | Cost of goods sold |  | (0.1) |  |  | $ | 1,996.2 |
Treasury rate locks | — |  |  | Interest expense, net |  | 0.1 |  |  | $ | 33.9 |
Total | $ | (0.3) |  |  |  |  | $ | (1.9) |  |  |
2023 |  |  |  |  |  |  |
Foreign currency contracts | $ | (1.7) |  |  | Cost of goods sold |  | $ | (2.5) |  |  | $ | 2,521.5 |
Commodity contracts | (0.1) |  |  | Cost of goods sold |  | 0.2 |  |  | $ | 2,521.5 |
Total | $ | (1.8) |  |  |  |  | $ | (2.3) |  |  |
|  |  | Recognized in Net Income (Loss)
Nine Months Ended September 30, | Gain (Loss) Recognized in Accumulated Other Comprehensive Loss |  | Classification of Gain (Loss) |  | Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income |  | Total Amount of the Line Item in the Condensed Consolidated Statements of Operations Containing Hedge Gains (Losses)
2024 |  |  |  |  |  |  |
Foreign currency contracts(1) | $ | (5.0) |  |  | Cost of goods sold |  | $ | (5.7) |  |  | $ | 6,564.2 |
Commodity contracts(2) | (0.3) |  |  | Cost of goods sold |  | (0.3) |  |  | $ | 6,564.2 |
Treasury rate locks | 6.1 |  |  | Interest expense, net |  | 0.3 |  |  | $ | 65.7 |
Total | $ | 0.8 |  |  |  |  | $ | (5.7) |  |  |
2023 |  |  |  |  |  |  |
Foreign currency contracts | $ | (8.6) |  |  | Cost of goods sold |  | $ | (5.1) |  |  | $ | 7,817.1 |
Commodity contracts | 0.1 |  |  | Cost of goods sold |  | 0.1 |  |  | $ | 7,817.1 |
Total | $ | (8.5) |  |  |  |  | $ | (5.0) |  |  |
____________________________________ (1) The outstanding contracts as of September 30, 2024 range in maturity through December 2024. (2) As of September 30, 2024, there were no outstanding contracts with future maturity dates. The following table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the three months ended September 30, 2024 (in millions):
|  | Before-Tax Amount |  | Income Tax Expense (Benefit) |  | After-Tax Amount
Accumulated derivative net gains as of June 30, 2024 |  | $ | 6.8 |  |  | $ | 2.7 |  |  | $ | 4.1 |
Net changes in fair value of derivatives |  | (0.1) |  |  | 0.2 |  |  | (0.3) |
Net losses reclassified from accumulated other comprehensive loss into income |  | 2.1 |  |  | 0.2 |  |  | 1.9 |
Accumulated derivative net gains as of September 30, 2024 |  | $ | 8.8 |  |  | $ | 3.1 |  |  | $ | 5.7 |
The following table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the nine months ended September 30, 2024 (in millions):
|  | Before-Tax Amount |  | Income Tax Expense (Benefit) |  | After-Tax Amount
Accumulated derivative net losses as of December 31, 2023 |  | $ | (1.3) |  |  | $ | (0.5) |  |  | $ | (0.8) |
Net changes in fair value of derivatives |  | 3.9 |  |  | 3.1 |  |  | 0.8 |
Net losses reclassified from accumulated other comprehensive loss into income |  | 6.2 |  |  | 0.5 |  |  | 5.7 |
Accumulated derivative net gains as of September 30, 2024 |  | $ | 8.8 |  |  | $ | 3.1 |  |  | $ | 5.7 |
As of September 30, 2024, approximately $3.5 million loss of realized derivatives, before taxes, remain in accumulated other comprehensive loss related to foreign currency contracts associated with inventory that had not yet been sold. Net Investment Hedges The Company uses non-derivative and derivative instruments to hedge a portion of its net investment in foreign operations against adverse movements in exchange rates. For instruments that are designated as hedges of net investments in foreign operations, changes in the fair value of the derivative instruments are recorded in foreign currency translation adjustments, a component of accumulated other comprehensive loss, to offset changes in the value of the net investments being hedged. When the net investment in foreign operations is sold or substantially liquidates, the amounts recorded in accumulated other comprehensive loss are reclassified to earnings. To the extent foreign currency denominated debt is de-designated from a net investment hedge relationship, changes in the value of the foreign currency denominated debt are recorded in earnings through the maturity date. On January 29, 2021, the Company entered into a cross currency swap contract as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment. The cross currency swap has an expiration date of January 29, 2028. At maturity of the cross currency swap contract, the Company was expected to deliver the notional amount of approximately €247.9 million (or approximately $277.0 million as of September 30, 2024) and receive $300.0 million from the counterparties. The Company receives quarterly interest payments from the counterparties based on a fixed interest rate until the maturity of the cross currency swap. On November 4, 2024, the Company's existing cross currency swap contract was terminated and the Company delivered the notional amount of approximately $277.4 million and received $300.0 million from the counterparties. In addition, the Company executed new $600.0 million cross currency swap contracts comprising of $200.0 million tranche for 3 years tenor, $200 million tranche for 5 years tenor and $200.0 million tranche for 7 years tenor. During the nine months ended September 30, 2023, the Company designated €150.0 million of its multi-currency revolving credit facility maturing December 2027 as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment. This portion of the multi-currency revolving credit facility was repaid in December 2023. The Company recognized the change in fair value of the foreign currency denominated debt designated as a net investment hedge, a gain of $1.7 million and $2.7 million, net of tax, in accumulated other comprehensive loss during the three and nine months ended September 30, 2023, respectively. The following table summarizes the notional values of the instrument designated as a net investment hedge (in millions):
| Notional Amount as of
| September 30, 2024 |  | December 31, 2023
Cross currency swap contract | $ | 300.0 |  |  | $ | 300.0 |
The following table summarizes the changes in the fair value of the cross currency swap contract designated as a net investment hedge during the three and nine months ended September 30, 2024 and 2023 (in millions):
| Gain (Loss) Recognized in Accumulated Other Comprehensive Loss for the Three Months Ended |  |  |  | Gain (Loss) Recognized in Accumulated Other Comprehensive Loss for the Nine Months Ended
| Before-Tax Amount |  | Income Tax Expense (Benefit) |  | After-Tax Amount |  |  |  |  |  |  |  | Before-Tax Amount |  | Income Tax Expense (Benefit) |  | After-Tax Amount
September 30, 2024 | $ | (7.1) |  |  | $ | (1.8) |  |  | $ | (5.3) |  |  |  |  |  |  |  |  | $ | 1.0 |  |  | $ | 0.2 |  |  | $ | 0.8 |
September 30, 2023 | 4.1 |  |  | 1.0 |  |  | 3.1 |  |  |  |  |  |  |  |  | (2.6) |  |  | (0.7) |  |  | (1.9) |
Derivative Transactions Not Designated as Hedging Instruments The Company enters into foreign currency contracts to economically hedge a portion of its receivables and payables on the Company and its subsidiaries’ balance sheets that are denominated in foreign currencies other than the functional currency. These contracts are classified as non-designated derivative instruments. Gains and losses on such contracts are substantially offset by losses and gains on the remeasurement of the underlying asset or liability being hedged and are immediately recognized into earnings. As of September 30, 2024 and December 31, 2023, the Company had outstanding foreign currency contracts with a notional amount of approximately $2,710.6 million and $3,125.1 million, respectively. The following table summarizes the results on net income of derivatives not designated as hedging instruments (in millions):
|  |  | Gain (Loss) Recognized in Net Income for the Three Months Ended |  | Gain (Loss) Recognized in Net Income for the Nine Months Ended
| Classification of Gain (Loss) |  | September 30, 2024 |  | September 30, 2023 |  | September 30, 2024 |  | September 30, 2023
Foreign currency contracts | Other expense, net |  | $ | 17.1 |  |  | $ | (9.9) |  |  | $ | (24.7) |  |  | $ | 39.2 |
The table below sets forth the fair value of derivative instruments as of September 30, 2024 (in millions):
| Asset Derivatives as of September 30, 2024 |  | Liability Derivatives as of September 30, 2024
| Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Derivative instruments designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency contracts | Other current assets |  | $ | 2.1 |  |  | Other current liabilities |  | $ | 4.6 |
Cross currency swap contract | Other noncurrent assets |  | 21.3 |  |  | Other noncurrent liabilities |  | — |
Derivative instruments not designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency contracts(1) | Other current assets |  | 2.4 |  |  | Other current liabilities |  | 5.9 |
Total derivative instruments |  |  | $ | 25.8 |  |  |  |  | $ | 10.5 |
__________________________________ (1) The outstanding contracts as of September 30, 2024 range in maturity through November 2024. The table below sets forth the fair value of derivative instruments as of December 31, 2023 (in millions):
| Asset Derivatives as of December 31, 2023 |  | Liability Derivatives as of December 31, 2023
| Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Derivative instruments designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency contracts | Other current assets |  | $ | 1.3 |  |  | Other current liabilities |  | $ | 1.2 |
Cross currency swap contract | Other noncurrent assets |  | 20.3 |  |  | Other noncurrent liabilities |  | — |
Derivative instruments not designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency contracts(1) | Other current assets |  | 17.1 |  |  | Other current liabilities |  | 12.8 |
Total derivative instruments |  |  | $ | 38.7 |  |  |  |  | $ | 14.0 |
___________________________________ (1) The outstanding contracts as of December 31, 2023 range in maturity through February 2024.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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