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Derivative Instruments | 12 Months Ended
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Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments As part of our risk management strategy, we occasionally use derivative instruments, including interest rate swaps, forward foreign exchange contracts and non-derivative instruments such as foreign currency denominated debt, to reduce our market risk for changes in interest rates and to manage foreign exchange rate risk. The objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts and non-derivative instruments used to hedge them, thereby reducing volatility of earnings or protecting the fair value of assets and liabilities. Derivative instruments may be designated as fair value hedges, cash flow hedges or hedges of the foreign currency exposure of a net investment in a foreign operation (“net investment hedges”) or they may not be designated as hedging instruments. Derivative instruments are recognized at fair value on a gross basis in other current and long-term assets, and other current and long-term liabilities in the consolidated balance sheets. The change in fair value of the derivative instruments is recognized in the consolidated statements of operations or consolidated statements of comprehensive income depending upon the type of hedge as further discussed below. Cash flows from derivative instruments are classified with the activities that correspond to the underlying hedged items in the consolidated statements of cash flows. Due to the use of derivative instruments, we are exposed to the risk that our counterparties will fail to meet their contractual obligations. To mitigate counterparty credit risk, we have a policy of only entering into derivative contracts with carefully selected major financial institutions based on their credit ratings and other factors, and periodically reassess their creditworthiness. We do not offset d erivative assets against liabilities in master netting agreements and there were no receivables or payables recognized on receipt or payment of cash collateral at December 31, 2025 and 2024. The interest rate swa ps effectively convert a portion of our variable rate borrowings under our existing facilities to a fixed rate based upon a determined notional amount. The forward foreign exchange contracts fix expected future cash flows in U.S. dollar terms on certain transactions and foreign currency denominated debt is used to partially offset the effects of changes in foreign currency exchange rates on our investments in certain foreign subsidiaries. We do not enter into derivative instruments for trading or speculative purposes. The notional amounts of financial instruments used to hedge the above risks are as follows (in millions):
|  | December 31,
|  | 2025 |  | 2024
Interest rate swaps |  | $ | 213 |  |  | $ | 204 |
Non-derivative debt instruments |  | $ | 192 |  |  | $ | 203 |
Cash Flow Hedges Interest rate swap agreements designated as cash flow hedges of interest payments mature in May 2029 and March 2030. Under the terms of the interest rate swap agreements, we will receive monthly variable interest payments based on one month Term SOFR and one month EURIBOR, respectively, and will pay interest based on a fixed rate of 2.683% per annum and 2.11% per annum, respectively. The fair value of interest rate swap agreements designated as cash flow hedges of interest rate risk are as follows (in thousands):
|  | December 31,
|  | 2025 |  | 2024
Derivative assets |  | $ | 2,587 |  |  | $ | 5,409 |
Derivative liabilities |  | $ | — |  |  | $ | 101 |
Gains/losses are deferred and recorded in accumulated other comprehensive income, net of income taxes, in the consolidated balance sheets and reclassified to interest expense in the consolidated statements of operations when the hedged interest payments on the underlying borrowing are recognized in interest expense. We expect to reclassify a net gain of $0.5 million from accumulated other comprehensive income in the next twelve months. We perform quarterly hedge effectiveness assessments and anticipate that the interest rate swaps will be highly effective. If it becomes probable that the hedged interest payment(s) will not occur, we immediately recognize the related deferred hedging gains/losses in earnings. There were no such reclassifications during the year ended December 31, 2025. Net Investment Hedge Euro-denominated debt is designated as a hedge of our net investment in Nissens Automotive's foreign operations whose functional currency is Danish kroner. Provided the net investment hedge is highly effective, gains/losses are recorded as a currency translation adjustment in accumulated other comprehensive income in the consolidated balance sheet. The gains/losses will s ubsequently be reclassified into earnings when the hedged net investment is either sold or substantially liquidated. We recognized a loss of $25.8 million and a gain of $9.7 million as a currency translation adjustment in other comprehensive income in the years ended December 31, 2025 and 2024 respectively. No gains or losses related to the net investment hedge were recognized in earnings in 2025. Non-Designated Derivatives In 2024, we realized losses of $2.5 million related to forward foreign exchange contracts that were used to economically hedge forecasted foreign currency transactions primarily related to our acquisition of Nissens Automotive. The losses were recorded in selling, general and administrative expenses in the consolidated statement of operations. There are no forward foreign exchange contracts outstanding at December 31, 2025 and 2024, respectively.

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