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FINANCIAL INSTRUMENTS AND DERIVATIVES | 6 Months Ended
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Jun. 30, 2024
FINANCIAL INSTRUMENTS AND DERIVATIVES |
FINANCIAL INSTRUMENTS AND DERIVATIVES | NOTE 12—FINANCIAL INSTRUMENTS AND DERIVATIVES The Company’s ongoing business operations expose it to various risks, including fluctuating foreign exchange rates, interest rate risk, and commodity price risk, in particular natural gas. To manage these risks, the Company periodically enters into derivative financial instruments, such as foreign exchange forward contracts, interest rate swap agreements, and commodity swap agreements, forward contracts, or options. The Company does not hold or enter into financial instruments for trading or speculative purposes. All derivatives are recorded on the condensed consolidated balance sheets at fair value. Foreign Exchange Forward Contracts Certain subsidiaries have assets and liabilities denominated in currencies other than their respective functional currencies, which creates foreign exchange risk. The Company’s principal strategy in managing its exposure to changes in foreign currency exchange rates is to naturally hedge the foreign currency-denominated liabilities on its balance sheet against corresponding assets of the same currency, such that any changes in liabilities due to fluctuations in exchange rates are offset by changes in their corresponding foreign currency assets. In order to further reduce this exposure, the Company also uses foreign exchange forward contracts to economically hedge the impact of the variability in exchange rates on assets and liabilities denominated in certain foreign currencies. These derivative contracts are not designated for hedge accounting treatment and as a result, any mark-to-market fluctuations are recognized currently at each reporting date within loss from continuing operations. As of June 30, 2024, the Company had open foreign exchange forward contracts with a notional U.S. dollar equivalent absolute value of $403.9 million. The following table displays the notional amounts of the most significant net foreign exchange hedge positions outstanding as of June 30, 2024: ​
​ | ​ | ​ | ​
Buy / (Sell) |  | June 30, 2024
Euro | ​ | $ | (302.2)
Swedish Krona | ​ | $ | 21.1
South Korean Won | ​ | $ | (19.9)
Chinese Yuan | ​ | $ | (17.9)
Swiss Franc | ​ | $ | 12.5
​ Open foreign exchange forward contracts as of June 30, 2024 had maturities occurring over a period of two months. Foreign Exchange Cash Flow Hedges From time-to-time, the Company also enters into forward contracts, as deemed appropriate, with the objective of managing the currency risk associated with forecasted U.S. dollar-denominated raw materials purchases by one of its subsidiaries whose functional currency is the euro. By entering into these forward contracts, which are designated as cash flow hedges, the Company buys a designated amount of U.S. dollars and sells euros at the prevailing market rate to mitigate the risk associated with the fluctuations in the euro-to-U.S. dollar foreign currency exchange rates. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in Accumulated Other Comprehensive Income (“AOCI”) to the extent effective, and reclassified to cost of sales in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur. The Company had no open foreign exchange cash flow hedges as of June 30, 2024. Commodity Cash Flow Hedges & Commodity Economic Hedges The Company purchases certain commodities, primarily natural gas, to operate facilities and generate heat and steam for various manufacturing processes, which purchases are subject to price volatility. In order to manage the risk of price fluctuations associated with these commodity purchases, as deemed appropriate, the Company may enter into commodity swaps, forward contracts, or options. As of June 30, 2024, the Company had open commodity swap agreements, which effectively convert a portion of its natural gas costs into a fixed rate obligation. These commodity derivatives are designated as cash flow hedges, and as such, the contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in AOCI to the extent effective, and reclassified to cost of sales in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur. Open commodity cash flow hedges as of June 30, 2024 had maturities occurring over a period of 6 months and had a notional value of approximately 319 thousand megawatt hours of natural gas purchases. The Company may also enter into certain commodity swap agreements to economically hedge the impact of these price fluctuations, which are not designated for hedge accounting treatment. Open commodity economic hedges as of June 30, 2024 had maturities occurring over a period of 9 months and had a notional value of approximately 1,085 thousand megawatt hours of natural gas purchases. Summary of Derivative Instruments The following table presents the effect of the Company’s derivative instruments, including those not designated for hedge accounting treatment, on the condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Location and Amount of Gain (Loss) Recognized in Statements of Operations
​ | ​ | Three Months Ended | ​ | Three Months Ended
​ | ​ | June 30, 2024 | ​ | June 30, 2023
​ |  | Cost of sales | ​ | Interest expense, net | ​ | Other (expense) income, net | ​ | Cost of sales | ​ | Interest expense, net | ​ | Other (expense) income, net
Total amount of income and (expense) line items presented in the statements of operations in which the effects of derivative instruments are recorded | ​ | $ | (851.6) | ​ | $ | (64.7) | ​ | $ | 3.3 | ​ | $ | (909.0) | ​ | $ | (40.2) | ​ | $ | 2.9
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The effects of cash flow hedge instruments: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity cash flow hedges | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amount of loss reclassified from AOCI into income | ​ | $ | (2.8) | ​ | $ | — | ​ | $ | — | ​ | $ | (9.7) | ​ | $ | — | ​ | $ | —
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The effects of derivatives not designated as hedge instruments: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Foreign exchange forward contracts | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amount of gain recognized in income | ​ | $ | — | ​ | $ | — | ​ | $ | 4.5 | ​ | $ | — | ​ | $ | — | ​ | $ | 6.0
Commodity economic hedges | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amount of gain (loss) recognized in income | ​ | $ | 0.6 | ​ | $ | — | ​ | $ | — | ​ | $ | (2.6) | ​ | $ | — | ​ | $ | —
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Location and Amount of Gain (Loss) Recognized in Statements of Operations
​ | ​ | Six Months Ended | ​ | Six Months Ended
​ | ​ | June 30, 2024 | ​ | June 30, 2023
​ |  | Cost of sales | ​ | Interest expense, net | ​ | Other (expense) income, net | ​ | Cost of sales | ​ | Interest expense, net | ​ | Other (expense) income, net
Total amount of income and (expense) line items presented in the statements of operations in which the effects of derivative instruments are recorded | ​ | $ | (1,695.0) | ​ | $ | (127.7) | ​ | $ | (0.5) | ​ | $ | (1,868.2) | ​ | $ | (78.5) | ​ | $ | 5.8
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The effects of cash flow hedge instruments: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity cash flow hedges | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amount of loss reclassified from AOCI into income | ​ | $ | (7.6) | ​ | $ | — | ​ | $ | — | ​ | $ | (16.1) | ​ | $ | — | ​ | $ | —
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The effects of derivatives not designated as hedge instruments: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Foreign exchange forward contracts | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amount of gain (loss) recognized in income | ​ | $ | — | ​ | $ | — | ​ | $ | 11.8 | ​ | $ | — | ​ | $ | — | ​ | $ | (1.8)
Commodity economic hedges | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amount of loss recognized in income | ​ | $ | (1.0) | ​ | $ | — | ​ | $ | — | ​ | $ | (15.0) | ​ | $ | — | ​ | $ | —
​ The following table presents the effect of cash flow hedge accounting on AOCI for the three and six months ended June 30, 2024 and 2023: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
` | ​ | Gain (Loss) Recognized in AOCI on Balance Sheet
​ | ​ | Three Months Ended | ​ | Six Months Ended
​ | ​ | June 30, | ​ | June 30,
​ | ​ | 2024 | ​ | 2023 | ​ | 2024 | ​ | 2023
Designated as Cash Flow Hedges | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity cash flow hedges | ​ | $ | 4.2 | ​ | $ | 0.2 | ​ | $ | 6.9 | ​ | $ | (9.7)
Total | ​ | $ | 4.2 | ​ | $ | 0.2 | ​ | $ | 6.9 | ​ | $ | (9.7)
​ ​ ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Gain (Loss) Recognized in Other expense (income), net in Statement of Operations | ​
​ | ​ | Three Months Ended | ​ | Six Months Ended | ​
​ | ​ | June 30, | ​ | June 30, | ​
​ |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Settlements and changes in the fair value of forward contracts (not designated as hedges) |  | $ | 4.5 |  | $ | 6.0 |  | $ | 11.8 |  | $ | (1.8) |
Remeasurement of foreign currency-denominated assets and liabilities | ​ | ​ | (3.3) | ​ | ​ | (2.6) | ​ | ​ | (12.8) | ​ | ​ | 7.9 | ​
Total | ​ | $ | 1.2 | ​ | $ | 3.4 | ​ | $ | (1.0) | ​ | $ | 6.1 | ​
​ The Company expects to reclassify in the next twelve months an approximate $4.8 million net loss from AOCI into earnings related to the Company’s outstanding commodity cash flow hedges as of June 30, 2024, based on current commodity price indices. The following tables summarize the gross and net unrealized gains and losses, as well as the balance sheet classification, of outstanding derivatives recorded in the condensed consolidated balance sheets: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | June 30, 2024
​ | ​ | Foreign | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Exchange | ​ | Commodity | ​ | Commodity | ​ | ​ | ​
Balance Sheet | ​ | Forward | ​ | Economic | ​ | Cash Flow | ​ | ​
Classification |  | Contracts | ​ | Hedges | ​ | Hedges | ​ | Total
Asset Derivatives: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Accounts receivable, net of allowance | ​ | $ | 4.8 | ​ | $ | — | ​ | $ | — | ​ | $ | 4.8
Gross derivative asset position | ​ | ​ | 4.8 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 4.8
Less: Counterparty netting | ​ | ​ | (0.7) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (0.7)
Net derivative asset position | ​ | $ | 4.1 | ​ | $ | — | ​ | $ | — | ​ | $ | 4.1
Liability Derivatives: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Accounts payable | ​ | $ | (0.7) | ​ | $ | (3.6) | ​ | $ | (4.8) | ​ | $ | (9.1)
Gross derivative liability position | ​ | ​ | (0.7) | ​ | ​ | (3.6) | ​ | ​ | (4.8) | ​ | ​ | (9.1)
Less: Counterparty netting | ​ | ​ | 0.7 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 0.7
Net derivative liability position | ​ | $ | — | ​ | $ | (3.6) | ​ | $ | (4.8) | ​ | $ | (8.4)
Total net derivative position | ​ | $ | 4.1 | ​ | $ | (3.6) | ​ | $ | (4.8) | ​ | $ | (4.3)
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2023 |
​ | ​ | Foreign | ​ | ​ | ​ | ​ | ​ | ​ |
​ | ​ | Exchange | ​ | Commodity | ​ | Commodity | ​ | ​ | ​ | ​
Balance Sheet | ​ | Forward | ​ | Economic | ​ | Cash Flow | ​ | ​ |
Classification |  | Contracts |  | Hedges |  | Hedges |  | Total |
Asset Derivatives: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Accounts receivable, net of allowance | ​ | $ | 0.3 | ​ | $ | — | ​ | $ | — | ​ | $ | 0.3 | ​
Gross derivative asset position | ​ | ​ | 0.3 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 0.3 | ​
Less: Counterparty netting | ​ | ​ | (0.3) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (0.3) | ​
Net derivative asset position | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​
Liability Derivatives: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Accounts payable | ​ | $ | (4.8) | ​ | $ | (7.2) | ​ | $ | (13.7) | ​ | $ | (25.7) | ​
Other noncurrent obligations | ​ | ​ | — | ​ | ​ | (0.9) | ​ | ​ | (0.7) | ​ | ​ | (1.6) | ​
Gross derivative liability position | ​ | ​ | (4.8) | ​ | ​ | (8.1) | ​ | ​ | (14.4) | ​ | ​ | (27.3) | ​
Less: Counterparty netting | ​ | ​ | 0.3 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 0.3 | ​
Net derivative liability position | ​ | $ | (4.5) | ​ | $ | (8.1) | ​ | $ | (14.4) | ​ | $ | (27.0) | ​
Total net derivative position | ​ | $ | (4.5) | ​ | $ | (8.1) | ​ | $ | (14.4) | ​ | $ | (27.0) | ​
​ Forward contracts, interest rate swaps, commodity forward contracts, swaps, or options, and cross currency swaps are entered into with a limited number of counterparties, each of which allows for net settlement of all contracts through a single payment in a single currency in the event of a default on or termination of any one contract. As such, in accordance with the Company’s accounting policy, these derivative instruments are recorded on a net basis by counterparty within the condensed consolidated balance sheets. Refer to Notes 13 and 18 of the condensed consolidated financial statements for further information regarding the fair value of the Company’s derivative instruments and the related changes in AOCI.

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