Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

We are exposed to certain risks arising from operating internationally, including fluctuations in foreign exchange rates primarily related to the translation of sterling and euro denominated net monetary liabilities, including intercompany balances, held by subsidiaries with a U.S. dollar functional currency and fluctuations in interest rates on our outstanding term loan borrowings. We manage these exposures within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes.

We enter into foreign exchange forward contracts, with durations of up to 12 months, designed to limit the exposure to fluctuations in foreign exchange rates related to the translation of certain non-U.S. dollar denominated liabilities, including intercompany balances. Hedge accounting is not applied to these derivative instruments as gains and losses on these hedge transactions are designed to offset gains and losses on underlying balance sheet exposures. As of June 30, 2025 and December 31, 2024, the notional amount of foreign exchange contracts where hedge accounting is not applied was $372.3 million and $461.2 million, respectively.

The foreign exchange gain (loss) in our condensed consolidated statements of income (loss) included the following gains (losses) associated with foreign exchange contracts not designated as hedging instruments (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
Foreign Exchange Forward Contracts:	2025		2024		2025		2024
Gain (loss) recognized in foreign exchange gain (loss)	$	12,393	$	(825)	$	21,000	$	(4,911)

To achieve a desired mix of floating and fixed interest rates on our variable rate debt, we entered into interest rate swap agreements in April 2023, which are effective until April 2026. These agreements hedge contractual term loan interest rates. As of June 30, 2025, the interest rate swap agreements had a notional amount of $500.0 million. As a result of these agreements, the interest rate on a portion of our term loan borrowings is fixed at 3.9086%, plus the borrowing spread, until April 30, 2026.

The impact on accumulated other comprehensive loss and earnings from derivative instruments that qualified as cash flow hedges was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
Interest Rate Contracts:	2025		2024		2025		2024

Gain recognized in accumulated other comprehensive loss, net of tax	$	458	$	1,592	$	15	$	6,769
Gain reclassified from accumulated other comprehensive loss to interest expense, net of tax	(406)		(1,344)		(802)		(2,700)

The cash flow effects of our derivative contracts for the six months ended June 30, 2025 and 2024 are included within net cash provided by operating activities in the condensed consolidated statements of cash flows.

The following tables summarize the fair value of outstanding derivatives (in thousands):


	Classification	June 30, 2025		December 31, 2024
Assets
Derivatives designated as hedging instruments:
Interest rate contracts	Other current assets	$	6	$	959
	Other non-current assets	—		32
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Other current assets	9,137		2,250
Total fair value of derivative asset instruments		$	9,143	$	3,241

Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts	Accrued liabilities	$	48	$	—

Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Accrued liabilities	2,801		10,198
Total fair value of derivative liability instruments		$	2,849	$	10,198

Although we do not offset derivative assets and liabilities within our condensed consolidated balance sheets, our International Swap and Derivatives Association agreements provide for net settlement of transactions that are due to or from the same counterparty upon early termination of the agreement due to an event of default or other termination event. The following table summarizes the potential effect on our condensed consolidated balance sheets of offsetting our interest rate and foreign exchange forward contracts subject to such provisions (in thousands):


	June 30, 2025
	Gross Amounts of Recognized Assets/ Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet		Gross Amounts Not Offset in the Consolidated Balance Sheet
Description							Derivative Financial Instruments		Cash Collateral Received (Pledged)		Net Amount
Derivative assets	$	9,143	$	—	$	9,143	$	(2,834)	$	—	$	6,309
Derivative liabilities	(2,849)		—		(2,849)		2,834		—		(15)


	December 31, 2024
	Gross Amounts of Recognized Assets/ Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet		Gross Amounts Not Offset in the Consolidated Balance Sheet
Description							Derivative Financial Instruments		Cash Collateral Received (Pledged)		Net Amount
Derivative assets	$	3,241	$	—	$	3,241	$	(2,910)	$	—	$	331
Derivative liabilities	(10,198)		—		(10,198)		2,910		—		(7,288)

- 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.

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+ Details

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