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Derivative Instruments | 3 Months Ended
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Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments The Company uses derivative instruments to manage selected foreign currency and interest rate exposures. The Company does not use derivative instruments for speculative trading purposes. All derivative instruments must be recorded on the balance sheet at fair value. For derivatives designated as cash flow hedges, changes in the fair value of the derivative is recorded as accumulated other comprehensive loss, or “AOCL,” and is reclassified to earnings when the underlying transaction has an impact on earnings. For foreign currency derivatives not designated as cash flow hedges, all changes in market value are recorded as a foreign currency exchange loss (gain) in the Company’s Consolidated Statements of Operations. The cash flow effects of derivatives are reported within net cash (used for) provided by operating activities on the Condensed Consolidated Statements of Cash Flows. The Company is exposed to credit losses in the event of non-performance by the counterparties on its financial instruments. The counterparties have investment grade credit ratings. The Company anticipates that these counterparties will be able to fully satisfy their obligations under the contracts. The Company's agreements with its counterparties contain provisions pursuant to which the Company could be declared in default of its derivative obligations. As of June 30, 2024, the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions as of June 30, 2024, it could have been required to settle its obligations under these agreements at amounts which approximate the June 30, 2024 fair values reflected in the table below. During the three months ended June 30, 2024, the Company was not in default of any of its derivative obligations. As of June 30, 2024, the Company had no derivatives designated as net investments or fair value hedges in accordance with FASB ASC Topic 815, “Derivatives and Hedging.” The Company has a cross currency swap agreement that is designated as a cash flow hedge to hedge changes in the value of an intercompany loan to a foreign subsidiary due to changes in foreign exchange rates. This intercompany loan is related to the acquisition of STAHL. As of June 30, 2024, the notional amount of this derivative is $88,443,000, and this contract matures on March 31, 2028. From its June 30, 2024 balance of AOCL, the Company expects to reclassify approximately $226,000 out of AOCL, and into foreign currency exchange loss (gain), during the next 12 months based on the contractual payments due under this intercompany loan. The Company has foreign currency forward agreements that are designated as cash flow hedges to hedge a portion of forecasted inventory purchases denominated in foreign currencies. As of June 30, 2024, the notional amount of those derivatives was $5,510,000, and all contracts mature by March 31, 2025. From its June 30, 2024 balance of AOCL, the Company expects to reclassify approximately $66,000 out of AOCL during the next 12 months based on the expected payments for the goods purchased. The Company's policy is to maintain a capital structure that is comprised of 50-70% of fixed rate long-term debt and 30-50% of variable rate long-term debt. The Company has two outstanding interest rate swap agreements in which the Company receives interest at a variable rate and pays interest at a fixed rate. The most recent interest rate swap agreement was entered into in fiscal year 2024 as a result of the additional debt from the montratec acquisition. These interest rate swap agreements are designated as cash flow hedges to hedge changes in interest expense due to changes in the variable interest rate of the Company's variable interest debt. The interest rate swaps mature on February 14, 2025 and April 30, 2028 and together have a total notional amount of $339,645,000 as of June 30, 2024. The effective portion of the changes in fair values of the interest rate swaps is reported in AOCL and will be reclassified to interest expense over the life of the swap agreements. From its June 30, 2024 balance of AOCL, the Company expects to reclassify approximately $4,369,000 of AOCL into interest and debt expense, during the next 12 months. The following is the effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three months ended June 30, 2024 and 2023 (in thousands):
Derivatives Designated as Cash Flow Hedges | Type of Instrument | Amount of Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives | Location of Gain or (Loss) Recognized in Income on Derivatives | Amount of Gain or (Loss) Reclassified from AOCL into Income
June 30, 2024 | Foreign exchange contracts | $ | (38) |  | Cost of products sold | $ | (43) |
June 30, 2024 | Interest rate swaps | 1,422 |  | Interest expense | 2,472 |
June 30, 2024 | Cross currency swaps | 674 |  | Foreign currency exchange (gain) loss | 514 |
June 30, 2023 | Foreign exchange contracts | (158) |  | Cost of products sold | (19) |
June 30, 2023 | Interest rate swap | 3,291 |  | Interest expense | 2,243 |
June 30, 2023 | Cross currency swaps | (841) |  | Foreign currency exchange (gain) loss | (473) |
The following is information relative to the Company’s derivative instruments in the Condensed Consolidated Balance Sheets (in thousands):
|  |  | Fair Value of Asset (Liability)
Derivatives Designated as Hedging Instruments | Balance Sheet Location |  | June 30, 2024 |  | March 31, 2024
Foreign exchange contracts | Prepaid expenses and other |  | $ | 44 |  |  | $ | 56 |
Foreign exchange contracts | Accrued liabilities |  | (186) |  |  | (133) |
Interest rate swap | Prepaid expenses and other |  | 5,801 |  |  | 7,503 |
Interest rate swap | Other non current liabilities |  | (82) |  |  | (381) |
Cross currency swap | Prepaid expenses and other |  | 304 |  |  | 199 |
Cross currency swap | Other non current liabilities |  | (1,763) |  |  | (2,541) |

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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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