Derivative Financial Instruments and Hedging Activities

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments and Hedging Activities

Note 10: Derivative Financial Instruments and Hedging Activities

The Company is exposed to certain risks arising from both business operations and economic conditions, including interest rate risk and foreign exchange risk. To mitigate the impact of interest rate and foreign exchange risk, the Company enters into derivative financial instruments. The Company maintains the majority of its overall interest rate exposure on floating rate borrowings to a fixed-rate basis, primarily with interest rate swap agreements. The Company manages exposure to foreign exchange fluctuations primarily through short-term forward contracts.

Interest Rate Derivative Instruments

As of December 31, 2024, the Company’s active interest rate hedging instruments consisted of nine interest rate swap agreements designated as cash flow hedges. Of the designated cash flow hedges, there are three interest rate swap agreements with a notional amount of $1.4 billion expiring on August 21, 2025 and six interest rate swap agreements with a notional amount of $550.0 million expiring on May 31, 2028.

In addition, the Company previously elected to terminate certain interest rate swap agreements in November 2022 and June 2023. Amounts relating to these terminated derivative instruments recorded in Accumulated other comprehensive loss will be amortized into earnings over the remaining life of the original agreements, which were scheduled to expire on August 21, 2025.

The Company records changes in the fair value of derivatives designated and qualifying as cash flow hedges in Accumulated other comprehensive loss in the Consolidated Balance Sheets and subsequently reclassifies the changes into earnings in the period that the hedged forecasted transaction affects earnings. As of December 31, 2024 and 2023, there were $22.7 million and $34.5 million in pre-tax gains, respectively, included in Accumulated other comprehensive loss related to these agreements, which will be reclassified to Interest expense, net of interest income as interest payments are made in accordance with the 2018 Credit Agreement; refer to Note 11: Long-Term Debt and Other Borrowings for discussion of the 2018 Credit Agreement (which is defined therein). During the next twelve months, the Company estimates that pre-tax gains of $15.5 million will be reclassified to Interest expense, net of interest income in the Consolidated Statements of Operations.

Non-Designated Foreign Exchange Derivative Instruments

Additionally, the Company enters into short-term forward contracts to mitigate the risk of fluctuations in foreign currency exchange rates that would adversely impact certain of the Company’s foreign currency denominated transactions. Hedge accounting was not elected for any of these contracts. As such, changes in the fair values of these contracts are recorded directly in earnings. The Company recognized a realized loss of $8.8 million and an unrealized loss of $0.8 million during the year ended December 31, 2024. The Company recognized a realized loss of $7.9 million, offset by an unrealized gain of $0.7 million during the year ended December 31, 2023. The Company recognized a realized loss of $6.5 million, offset by an unrealized gain of $0.2 million during the year ended December 31, 2022.

As of December 31, 2024 and 2023, the Company had 31 and 27 foreign currency exchange forward contracts outstanding covering a notional amount of $559.5 million and $1.3 billion, respectively. As of December 31, 2024 and 2023, the Company had not posted, and does not hold, any collateral related to these agreements.

The following table presents the fair value of derivatives as of December 31, 2024 and 2023 (in millions):

			December 31, 2024				December 31, 2023
	December 31, 2024		Assets		Liabilities		Assets		Liabilities
Derivative Instrument	Notional		Fair Value		Fair Value		Fair Value		Fair Value
Designated:
Cash flow hedges:
Interest rate swaps	$	1,973.6	$	11.3	$	3.0	$	4.3	$	6.7
Non-designated:
Foreign currency forward contracts	$	559.5	$	1.3	$	1.7	$	1.0	$	0.7

The fair value of interest rate swap assets is included within Other non-current assets. The fair value of interest rate swap liabilities is included within Other current liabilities and Other non-current liabilities as of December 31, 2024 and 2023, respectively, based on the maturity date of the respective agreements. The fair value of foreign currency forward contracts is included in Prepaid expenses and other current assets and Other current liabilities, respectively. The Company does not net derivatives in the Consolidated Balance Sheets.

The following table presents the effect of derivatives designated as cash flow hedges in the Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 (in millions):

	Beginning Accumulated Other Comprehensive (Gain) Loss(1)		Amount of (Gain) Loss Recognized in Other Comprehensive Loss on Derivatives(2)		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Statement of Operations(3)		Ending Accumulated Other Comprehensive (Gain) Loss
Year Ended December 31, 2024
Interest rate cash flow hedges	$	(37.0)	$	(25.7)	$	37.5	$	(25.2)
Year Ended December 31, 2023
Interest rate cash flow hedges	$	(48.7)	$	(24.3)	$	36.0	$	(37.0)
Year Ended December 31, 2022
Interest rate cash flow hedges	$	84.2	$	(116.0)	$	(16.9)	$	(48.7)

(1) Amount is net of related deferred tax benefit of $2.5 million, $0.0 million and $0.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

(2) Amount is net of related deferred tax expense of $4.8 million and benefit of $2.5 million and $0.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

(3) Amount is net of related income tax expense of $4.8 million, $0.0 million and $0.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

During the years ended December 31, 2024, 2023 and 2022, gains of $37.5 million and $36.0 million, and losses of $16.9 million, respectively, related to interest rate hedges were reclassified into earnings and recognized in Interest expense, net of interest income in the Consolidated Statements of Operations.