XML 34 R23.htm IDEA: XBRL DOCUMENT
v3.24.3

Derivatives and Hedging | 9 Months Ended
--- | ---
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging | Derivatives and Hedging We use designated cash flow hedges and non-designated hedges in the form of foreign currency forward contracts as part of our strategy to manage the exposure to fluctuations in foreign currency exchange rates and to mitigate the impact of foreign currency translation on transactions that are denominated in the local currencies in the various international regions in which we do business. We also use interest rate swap contracts to mitigate the impact of variable interest rates on our long-term debt. We only use foreign currency forward contracts and interest rate swap contracts to meet our objectives of minimizing variability in our operating results which may arise from changes in foreign exchange rates and interest rates, and we do not enter into either of these types of contracts for speculative purposes. We utilize counterparties for our derivative instruments that we believe are creditworthy at the time we enter into the transactions, and we closely monitor the credit ratings of these counterparties. The following table summarizes the fair value of our derivative instruments as well as the location of the asset and/or liability on the condensed consolidated balance sheets as of the periods presented below (in millions):
| Balance Sheet Location |  | Fair Value of Asset Derivatives
| September 30, 2024 |  | December 31, 2023
Derivatives designated as cash flow hedging instruments: |  |  |  |  |
Foreign currency forward contracts | Other current assets |  | $ | 0.5 |  |  | $ | — |
Interest rate swap contract | Other current assets |  | 1.8 |  |  | 5.2 |
Total |  |  | $ | 2.3 |  |  | $ | 5.2 |
Derivatives not designated as hedging instruments: |  |  |  |  |
Foreign currency forward contracts | Other current assets |  | 0.7 |  |  | 0.2 |
Total asset position |  | $ | 3.0 |  |  | $ | 5.4 |
| Balance Sheet Location |  | Fair Value of Liability Derivatives
| September 30, 2024 |  | December 31, 2023
Derivatives designated as cash flow hedging instruments: |  |  |  |  |
Foreign currency forward contracts | Accounts payable and accrued expenses |  | $ | 0.8 |  |  | $ | — |
Interest rate swap contracts | Other long-term liabilities |  | $ | 3.4 |  |  | $ | 2.6 |
|  |  | $ | 4.2 |  |  | $ | 2.6 |
Derivatives not designated as hedging instruments: |  |  |  |  |
Foreign currency forward contracts | Accounts payable and accrued expenses |  | 4.5 |  |  | 4.5 |
Total liability position |  | $ | 8.7 |  |  | $ | 7.1 |
Our derivative instruments are subject to a master netting agreement with each respective counterparty bank and are therefore net settled at their maturity date. Although we have the legal right of offset under the master netting agreements, we have elected not to present these contracts on a net settlement amount basis, and therefore present these contracts on a gross basis on the accompanying condensed consolidated balance sheets as of September 30, 2024 and consolidated balance sheets as of December 31, 2023. Cash Flow Hedging Instruments Foreign Currency Forward Contracts We use foreign currency derivatives designated as qualifying cash flow hedging instruments, including foreign currency forward contracts to help mitigate our foreign currency exposure from intercompany sales of inventory and intercompany expense reimbursements to our foreign subsidiaries. These contracts generally mature within 12 months to 15 months from their inception. As of September 30, 2024, the notional amounts of our foreign currency forward contracts designated as cash flow hedge instruments was $11.8 million. As of December 31, 2023, there were no notional amounts on our foreign currency contracts designated as cash flow hedging instruments. Interest Rate Swap Contract We use interest rate swaps designated as a cash flow hedge to mitigate the risk of changes in interest rates associated with our variable-rate long-term debt. As part of our debt modification in March 2023, we entered into a termination agreement to unwind an existing interest rate swap. As a result of the termination, we received proceeds of $5.6 million, of which $1.0 million and $3.2 million were included in accumulated other comprehensive loss as of September 30, 2024 and December 31, 2023, respectively, and will be amortized into interest expense over the remaining term of the contract. In April 2023, we entered into interest rate swaps designated as cash flow hedges in order to mitigate the risk of interest rate fluctuations associated with our 2023 Term Loan B as well as any of our other variable-rate debt. Over the life of the 2023 Term Loan B, we will receive variable interest payments from the counterparty lenders in exchange for our fixed interest rate payments which are made at a weighted average rate of 3.36% across our interest rate swap contracts, without exchange of the underlying notional amount, which was $400.0 million as of both September 30, 2024 and December 31, 2023. The following tables summarize the net effect of all cash flow hedges for each of our derivative contracts on the condensed consolidated financial statements for the periods presented (in millions):
|  | (Loss)/Gain Recognized in Other Comprehensive Income
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Derivatives designated as cash flow hedging instruments |  | 2024 |  | 2023 |  | 2024 |  | 2023
Foreign currency forward contracts |  | $ | (3.0) |  |  | $ | 1.8 |  |  | $ | 4.2 |  |  | $ | 8.9 |
Interest rate swap contracts |  | (10.8) |  |  | 8.5 |  |  | 1.7 |  |  | 18.4 |
|  | $ | (13.8) |  |  | $ | 10.3 |  |  | $ | 5.9 |  |  | $ | 27.3 |
|  |  |  | Gain Reclassified from Other Comprehensive Income into Earnings
|  |  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Derivatives designated as cash flow hedging instruments |  | Statement of Operations Location |  | 2024 |  | 2023 |  | 2024 |  | 2023
Foreign currency forward contracts |  | Cost of Products |  | $ | 1.9 |  |  | $ | 1.9 |  |  | $ | 5.6 |  |  | $ | 4.3 |
Interest rate swap contracts |  | Interest Expense |  | 2.7 |  |  | 2.7 |  |  | 8.2 |  |  | 5.5 |
|  |  |  | $ | 4.6 |  |  | $ | 4.6 |  |  | $ | 13.8 |  |  | $ | 9.8 |
For the three and nine months ended September 30, 2024, $0.6 million and $2.4 million, respectively, of net gains related to the amortization of forward points were released from accumulated other comprehensive income and recognized in cost of products. Based on the current valuation of our foreign currency forward contracts, we expect to release net losses of $1.1 million related to our foreign currency forward contracts from accumulated other comprehensive income into earnings over the course of the next 12 months. Foreign Currency Forward Contracts Not Designated as Hedging Instruments We use foreign currency forward contracts that are not designated as qualifying cash flow hedging instruments to mitigate the exposure to fluctuations in foreign currency exchange rates due to the remeasurement of certain balance sheet payables and receivables denominated in foreign currencies, as well as gains and losses resulting from the translation of the operating results of our international subsidiaries into U.S. dollars for financial reporting purposes. These contracts generally mature within 12 months from inception. As of September 30, 2024 and December 31, 2023, the notional amounts of our foreign currency forward contracts used to mitigate the exposures discussed above were approximately $274.5 million and $209.4 million, respectively. The following table summarizes the location of net gains for each type of our derivative contracts recognized in the condensed consolidated statements of operations for the periods presented (in millions):
|  | Location of Net (Loss)/Gain Recognized in Income on Derivative Instruments |  | Net (Loss)/Gain Recognized in Income on Derivative Instruments
Derivatives not designated as hedging instruments |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Foreign currency forward contracts |  | Other income, net |  | $ | (19.7) |  |  | $ | 10.9 |  |  | $ | 9.5 |  |  | $ | 29.0 |
During the three months ended September 30, 2024 and 2023, we recognized net foreign currency transactio n gains of $17.2 million and losses of $7.0 million, respectively, in other income (expense), net. During the nine months ended September 30, 2024 and 2023, we recognized net foreign currency transactio n losses of $1.0 million and $18.0 million, respectively, in other income (expense), net.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration