Derivative Financial Instruments

6 Months Ended

Mar. 31, 2022

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. As of March 31, 2022, the notional amount of the Company’s interest rate swaps was $531,000.

Foreign Currency Risk Management

The Company’s functional currency is the U.S. dollar. By operating internationally, the Company is subject to foreign currency translation risk associated with converting the foreign operations’ financial statements into U.S. dollars transactions denominated in currencies other than the U.S. dollar (“foreign currencies”). The Company is also subject to currency risk from transactions denominated in 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 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 March 31, 2022, the notional amount of the forward contracts was $9,460.

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 a portion of this exposure and offset the related compensation expense. As of March 31, 2022, the notional amount of the total return swaps was $5,488.

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 fully expects the counterparties to perform under their respective 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	March 31, 2022		September 30, 2021
Interest rate swaps	Prepaid and other current assets	$	5,996	$	3,127
Foreign currency forward contracts	Prepaid and other current assets	112		6
Commodity swaps	Prepaid and other current assets	9		—
Interest rate swaps	Other non‑current assets	24,944		—

		Liability Derivatives
	Balance Sheet Location	March 31, 2022		September 30, 2021
Interest rate swaps	Accrued expenses and other current liabilities	$	—	$	303
Foreign currency forward contracts	Accrued expenses and other current liabilities	33		102
Commodity swaps	Accrued expenses and other current liabilities	—		19

The following represents the amount of gain (loss) recognized in Accumulated other comprehensive income (loss) (“AOCI”) (net of tax) during the periods presented:

	Three Months Ended March 31,				Six Months Ended March 31,
	2022		2021		2022		2021
Interest rate swaps	$	21,077	$	8,811	$	26,948	$	9,268
Foreign currency forward contracts	100		(335)		82		(332)
Commodity swaps	8		—		28		—
	$	21,185	$	8,476	$	27,058	$	8,936

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

	Three Months Ended March 31,				Six Months Ended March 31,
Location of (Loss) Gain	2022		2021		2022		2021
Cost of product sales and services	$	6	$	(13)	$	(79)	$	(13)
General and administrative expense	—		(40)		(7)		(72)
Selling and marketing expense	(1)		(39)		—		(39)
Interest expense	(550)		(523)		(1,167)		(1,033)
	$	(545)	$	(615)	$	(1,253)	$	(1,157)

Based on the fair value amounts of the Company’s cash flow hedges at March 31, 2022, the Company expects that approximately $76 of pre-tax net gains 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 cash flow hedges for the periods presented:

		Asset Derivatives
	Balance Sheet Location	March 31, 2022		September 30, 2021
Total return swaps—deferred compensation	Prepaid and other current assets	$	250	$	—
Foreign currency forward contracts	Prepaid and other current assets	—		18
		Liability Derivatives
	Balance Sheet Location	March 31, 2022		September 30, 2021
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:

	Three Months Ended March 31,				Six Months Ended March 31,
Location of Loss	2022		2021		2022		2021
General and administrative expense	$	(352)	$	—	$	(41)	$	—
	$	(352)	$	—	$	(41)	$	—