Hedging Transactions and Derivative Financial Instruments

6 Months Ended

Jun. 27, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Hedging Transactions and Derivative Financial Instruments

HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses cross-currency swap derivative contracts to partially hedge its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the euro. The cross-currency swap derivative contracts are agreements to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. On December 23, 2024, the Company extended its existing $150.0 million notional value cross-currency swap derivative contract for an additional three years, which now matures on January 17, 2028. This contract effectively converts a portion of the Company’s U.S. dollar denominated senior term loan facilities to obligations denominated in euros and partially offsets the impact of changes in currency rates on foreign currency denominated net investments.

The Company also has foreign currency denominated debt consisting of a senior euro term loan and euro borrowings under a revolving credit facility. Both the senior euro term loan and the euro borrowings under the revolving credit facility represent a partial hedge of the Company’s net investment in foreign operations against adverse movements in exchange rates between the U.S. dollar and the euro and are designated and qualify as non-derivative hedging instruments.

Refer to Note 11 for further discussion of the Company’s debt and credit facilities.

The change in the fair value of the cross-currency swap instrument and the foreign currency translation related to the senior euro term loan and euro borrowings under the revolving credit facility are recorded in accumulated other comprehensive loss in the accompanying Condensed Consolidated Balance Sheets, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive loss as reflected in Note 13.

The following table summarizes the notional values and pretax impact of changes in the fair values of instruments designated as net investment hedges in accumulated other comprehensive loss (“OCI”) for the three and six months ended June 27, 2025 and June 28, 2024 ($ in millions):

	Three Months Ended June 27, 2025				Three Months Ended June 28, 2024
	Notional Amount		Loss Recognized in OCI		Notional Amount		Gain Recognized in OCI
Foreign currency denominated debt	$	527.3	$	(33.0)	$	375.0	$	2.8
Foreign currency contract	150.0		(11.6)		150.0		1.0
Total	$	677.3	$	(44.6)	$	525.0	$	3.8

	Six Months Ended June 27, 2025				Six Months Ended June 28, 2024
	Notional Amount		Loss Recognized in OCI		Notional Amount		Gain Recognized in OCI
Foreign currency denominated debt	$	527.3	$	(49.6)	$	375.0	$	11.4
Foreign currency contract	150.0		(16.3)		150.0		4.3
Total	$	677.3	$	(65.9)	$	525.0	$	15.7

The Company did not reclassify any deferred gains or losses related to its net investment hedge from accumulated other comprehensive loss to income during the three and six months ended June 27, 2025 and June 28, 2024. In addition, the Company did not have any ineffectiveness related to its net investment hedge and therefore did not reclassify any portion of the above net investment hedge from accumulated other comprehensive loss into income during the three and six months ended June 27, 2025 and June 28, 2024. The cash inflows and outflows associated with the Company’s derivative contract designated as a net investment hedge is classified in investing activities in the accompanying Condensed Consolidated Statements of Cash Flows.

Additionally, the Company uses foreign currency forward and foreign currency call option contracts to hedge its foreign currency risk associated with certain foreign denominated balance sheet transactions. These foreign currency forward and foreign currency call option contracts are not designated as a hedge for accounting purposes and therefore the changes in the fair value of these instruments are recognized immediately in earnings. As of June 27, 2025, the Company had outstanding foreign currency forward contracts with an aggregate notional amount of $467.2 million, which matured in July 2025. The realized and unrealized gain (losses) related to forward contracts or call options partially offset the corresponding gains (losses) related to the underlying foreign denominated balance sheet transactions.

The Company’s derivative instrument, as well as its non-derivative debt instrument designated and qualifying as net investment hedges, were classified in the Company’s Condensed Consolidated Balance Sheets as follows ($ in millions)

	June 27, 2025		December 31, 2024
Qualifying Net Investment Hedges:
Derivative hedging instruments:
Other long-term liabilities	$	10.5	$	—
Other long-term assets	$	—	$	5.9
Non-derivative hedging instruments:
Long-term debt	$	527.3	$	362.4
Non - Designated Hedge Derivatives:
Accrued expenses and other liabilities, net	$	0.1	$	—

Amounts above related to the Company’s hedged derivative assets expected to be reclassified from accumulated other comprehensive loss to net income during the next 12 months are not significant.