Derivative Financial Instruments

12 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Financial Instruments

Interest Rate Risk Management

The Company is subject to market risk exposure arising from changes in interest rates on the senior secured credit facilities as well as variable rate equipment financings, which bear interest at rates that are indexed against LIBOR. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to mitigate its exposure to rising interest rates.

To accomplish these objectives, on June 30, 2021, the Company entered into an interest rate swap with an effective date of August 1, 2022 to mitigate risk associated with a variable rate equipment financing. The interest rate swap provides for a fixed rate of 5.25%, has a notional amount of $31,000 and a term of seven years. The interest rate swap has been designated as a cash flow hedge.

On May 22, 2020, the Company entered into an interest rate swap to mitigate risks associated with variable rate debt. The interest rate swap became effective on June 30, 2020, has a term of five years to hedge the variability of interest payments on the first $500,000 of the Company’s senior secured debt and fixes LIBOR on this portion of the senior secured debt at 0.61%. The interest rate swap has been designated as a cash flow hedge.

Foreign Currency Risk Management

The Company’s functional currency is the U.S. dollar. By operating internationally, the Company is subject to foreign currency risk from transactions denominated in currencies other than the U.S. dollar (“foreign currencies”). To mitigate cross-currency transaction risk, the Company analyzes significant exposures where it has receipts or payments in a currency other than the functional currency of its operations, and from time to time may strategically enter into short-term foreign currency forward contracts to lock in some or all of the cash flows associated with these transactions. The Company is also subject to currency translation risk associated with converting the foreign operations’ financial results into U.S. dollars. The Company uses foreign currency derivative contracts in order to manage the effect of exchange fluctuations on forecasted sales and purchases that are denominated in foreign currencies. To mitigate the impact of foreign exchange rate risk, the Company entered into a series of forward contracts designated as cash flow hedges. As of September 30, 2021, the notional amount of the forward contracts was $7,076.

Equity Price Risk Management

The Company is exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Equity price movements affect the compensation expense as certain investments made by the Company’s employees in the deferred compensation plan are revalued. Although not designated as accounting hedges, the Company utilizes derivatives such as total return swaps to economically hedge this exposure and offset the related compensation expense. As of September 30, 2021, the notional amount of the total return swaps was $4,540.

Credit Risk Management

The counterparties to the Company’s derivative contracts are highly rated financial institutions. The Company regularly reviews the creditworthiness of its financial counterparties and does not expect to incur a significant failure of any counterparties to perform under any agreements. The Company is not subject to any obligations to post collateral under derivative instrument contracts. The Company records all derivative instruments on a gross basis in the Consolidated Balance Sheets. Accordingly, there are no offsetting amounts that net assets against liabilities.

Derivatives Designated as Cash Flow Hedges

The following represents the fair value recorded for derivatives designated as cash flow hedges for the periods presented:

		Asset Derivatives
	Balance Sheet Location	September 30, 2021		September 30, 2020
Interest rate swaps	Prepaid and other current assets	$	3,127	$	—
Foreign currency forward contracts	Prepaid and other current assets	6		133

		Liability Derivatives
	Balance Sheet Location	September 30, 2021		September 30, 2020
Interest rate swaps	Accrued expenses and other current liabilities	$	303	$	4,669
Foreign currency forward contracts	Accrued expenses and other current liabilities	102		47
Commodity swaps	Accrued expenses and other current liabilities	19		—

The following represents the amount of (loss) gain recognized in AOCI (net of tax) during the periods presented:

	Year Ended September 30,
	2021		2020		2019
Interest rate swap	$	5,252	$	(5,155)	$	—
Interest rate cap	—		(19)		19
Foreign currency forward contracts	(324)		(201)		(443)
Commodity swaps	(19)		—		—
	$	4,909	$	(5,375)	$	(424)

The following represents the amount of (loss) gain reclassified from AOCI into earnings during the periods presented:

	Year Ended September 30,
Location of (Loss) Gain	2021		2020		2019
Cost of product sales and services	$	(70)	$	(8)	$	(309)
General and administrative expense	(4)		(192)		82
Selling and marketing expense	(69)		28		—
Research and development expense	—		—		(271)
Interest expense	(2,241)		(486)		—
	$	(2,384)	$	(658)	$	(498)

Based on the fair value amounts of the Company’s cash flow hedges at September 30, 2021, the Company expects that approximately $71 of pre-tax net losses will be reclassified from AOCI into earnings during the next twelve months. The amount ultimately realized, however, will differ as exchange rates vary and the underlying contracts settle.

Derivatives Not Designated as Hedging Instruments

The following represents the fair value recorded for derivatives not designated as hedges for the periods presented:

		Asset Derivatives
	Balance Sheet Location	September 30, 2021		September 30, 2020
Foreign currency forward contracts	Prepaid and other current assets	$	18	$	7
		Liability Derivatives
	Balance Sheet Location	September 30, 2021		September 30, 2020
Total return swaps—deferred compensation	Accrued expenses and other current liabilities	$	130	$	—

The following represents the amount of loss recognized in earnings for derivatives not designated as hedges during the periods presented:

	Year Ended September 30,
Location of Loss	2021		2020		2019
General and administrative expense	$	(106)	$	—	$	—
	$	(106)	$	—	$	—