Derivatives

3 Months Ended

Sep. 30, 2024

Derivatives

Derivatives

9.  Derivatives

We monitor our exposure to foreign currency exchange rates and interest rates and from time-to-time use derivatives to manage certain of these risks. We designate derivatives as a hedge of a forecasted transaction or of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). All changes in the fair value of a highly effective cash flow hedge are recorded in Accumulated other comprehensive loss.

We routinely assess whether the derivatives used to hedge transactions are effective. If we determine a derivative ceases to be an effective hedge, we discontinue hedge accounting in the period of the assessment for that derivative, and immediately recognize any unrealized gains or losses related to the fair value of that derivative in the consolidated statements of operations.

We record derivatives at fair value in the consolidated balance sheets. For additional details regarding fair value, see “Note 10 — Fair Value Measurements.”

In September 2024, we entered into an interest rate swap agreement on $150,000 of notional principal that effectively converts the floating SOFR portion of our interest obligation on that amount of debt issued under the 2024 Credit Facilities to a fixed rate of 3.18% through September 2029. We are a party to an interest rate swap agreement on $300,000 of notional principal that effectively converts the floating SOFR portion of our interest obligation to a fixed rate 0.51% through June 2025. We have designated the interest rate swaps as highly effective cash flow hedges.

We are a party to foreign currency option contracts used to hedge cash flows related to monthly inventory purchases. The individual option contracts mature monthly through June 2025. The forecasted inventory purchases are probable of occurring and the individual option contracts were designated as highly effective cash flow hedges.

The consolidated balance sheet includes the net fair values of our outstanding foreign currency option contracts within the respective line items, based on the net financial position and maturity date of the individual contracts. The consolidated balance sheet includes the net fair values of our outstanding interest rate swaps within the respective balance sheet line items, based on the expected timing of the cash flows. The consolidated balance sheet includes assets and liabilities for the fair values of outstanding derivatives that are designated and effective as cash flow hedges as follows:

	September 30,		June 30,
As of	2024		2024
Other current assets
Foreign currency option contracts, net	$	90	$	39
Interest rate swap		8,819		13,151
Accrued expense and other current liabilities
Foreign currency option contracts, net		—		(41)
Other liabilities
Interest rate swap		(653)		—
Total Fair Value
Foreign currency option contracts, net		90		(2)
Interest rate swap		8,166		13,151

Notional amounts of the derivatives as of the balance sheet date were:

	September 30,
As of	2024
Interest rate swap	$	450,000
Brazil Real-USD call options	R$	54,000
Brazil Real-USD put options	R$	(54,000)

The consolidated statements of operations and statements of comprehensive income (loss) for the periods ended September 30, 2024 and 2023 included the effects of derivatives as follows:

	Three Months
For the Periods Ended September 30	2024		2023
Foreign currency option contracts, net
(Income) recorded in consolidated statements of operations	$	(510)	$	(181)
Consolidated statement of operations - total cost of goods sold	$	176,937	$	163,623
Consolidated statement of operations - total selling, general and administrative expenses	$	65,796	$	68,452
(Income) recorded in comprehensive income	$	(137)	$	333
Interest rate swap
(Income) recorded in consolidated statements of operations	$	(3,900)	$	(3,570)
Consolidated statement of operations - total interest expense, net	$	7,641	$	4,564
(Income) expense recorded in comprehensive income	$	4,985	$	1,558

We recognize gains and losses related to foreign currency derivatives as a component of cost of goods sold at the time the hedged item is sold. Inventory as of September 30, 2024, included realized net gains of $652 related to matured contracts. We anticipate the net gains included in inventory will be recognized in cost of goods sold within the next twelve to eighteen months.