Derivative Instruments and Hedging Activity

6 Months Ended

Jun. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activity

In the normal course of business, we use forward interest rate swaps to manage the interest rate risk associated with our variable-rate borrowings under our senior secured credit facility and we use foreign exchange forward contracts to manage the foreign currency exchange rate risk associated with our operations in India and Canada. We do not use derivative instruments for trading or other speculative purposes.

Cash Flow Hedges

We have designated our interest rate swaps and Indian Rupee forward contracts as cash flow hedges. Therefore, changes in the fair value of these derivative instruments are recorded to other comprehensive income to the extent effective and reclassified to earnings upon settlement. Below is additional information on the derivative instruments designed as cash flow hedges in effect during the periods presented. From time to time, we may enter into additional forward interest rate swaps or Indian Rupee forward contracts to further hedge against our interest rate and foreign currency exchange rate risk.

Interest Rate Swaps: We are party to forward interest rate swap agreements with aggregate notional amounts of $250.0 million as of both June 30, 2025 and December 31, 2024. Under the terms of the interest rate swap agreements, we receive from the counterparty interest on the notional amount based on one month Term SOFR and we pay to the counterparty a stated, fixed rate. The forward interest rate swap agreements have staggered maturities through February 28, 2030.

As of June 30, 2025, it was anticipated that $0.2 million of the gains, net of tax, related to interest rate swaps currently recorded in accumulated other comprehensive income (loss) will be reclassified into interest expense, net of interest income in our consolidated statement of operations within the next 12 months.

Indian Rupee Forward Contracts: We are party to Indian Rupee forward contracts that are scheduled to mature monthly through April 30, 2026. As of June 30, 2025 and December 31, 2024, the aggregate notional amounts of these contracts were Indian Rupee (INR) 0.64 billion, or $7.5 million, and Indian Rupee (INR) 1.40 billion, or $16.3 million, respectively, based on the exchange rates in effect as of each period end.

As of June 30, 2025, it was anticipated that less than $0.1 million of losses, net of tax, related to these foreign currency forward contracts currently recorded in accumulated other comprehensive income (loss) will be reclassified into earnings in our consolidated statement of operations within the next 12 months.

Refer to Note 12 “Other Comprehensive Income (Loss)” for additional information on our cash flow hedges.

Derivatives not Designated as Hedging Instruments

Canadian Dollar Forward Contracts: In the first quarter of 2025, we entered into an initial Canadian Dollar forward contract with a notional amount of $25.0 million that settled on March 31, 2025. Subsequently, on March 31, 2025, we entered into a Canadian Dollar forward contract with a notional amount of $25.0 million that settled on June 30, 2025; and on June 30, 2025, we entered into another Canadian Dollar forward contract with a notional amount of $25.0 million that will settle on September 29, 2025. We did not designate any of these derivatives as accounting hedging instruments. Therefore, changes in the fair value of the derivatives are recorded to other income (expense), net in our consolidated statements of operations. For the three and six months ended June 30, 2025, we recognized $1.1 million and $0.9 million, respectively, of realized gains related to the settled forward contracts. We did not recognize any gain or loss related to the outstanding forward contract entered into on June 30, 2025. From time to time, we may enter into additional Canadian Dollar forward contracts to continue to establish economic hedges against our foreign exchange rate risk.

The table below sets forth additional information relating to our derivative instruments recognized on our consolidated balance sheets as of June 30, 2025 and December 31, 2024.


Derivative Instrument	Balance Sheet Location	June 30, 2025		December 31, 2024
Assets
Cash Flow Hedges
Interest rate swaps	Prepaid expenses and other current assets	$	583	$	1,600
Interest rate swaps	Other non-current assets	181		1,381



Total Assets		$	764	$	2,981

Liabilities
Cash Flow Hedges
Interest rate swaps	Accrued expenses and other current liabilities	$	260	$	—
Interest rate swaps	Deferred compensation and other liabilities	3,715		—
Foreign exchange forward contracts	Accrued expenses and other current liabilities	55		381


Total Liabilities		$	4,030	$	381

All of our derivative instruments are transacted under International Swaps and Derivatives Association (ISDA) master agreements. These agreements permit the net settlement of amounts owed in the event of default and certain other termination events. Although netting is permitted, it is our policy to record all derivative assets and liabilities on a gross basis in our consolidated balance sheet.