Derivatives and Hedging

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company's policy requires that derivatives are used solely for managing risks and not for speculative purposes. As a result of the Company’s European operations, the Company is exposed to fluctuations in exchange rates between EURO and USD. As such, the Company entered into cross-currency rate swaps during the year ended December 31, 2022, to manage currency risks related to our investments in foreign operations. During the year ended December 2024, the Company extended a cross-currency rate swap derivative by one year (notional amount of 123.2 million euros). The Company is also subject to interest rate risk related to the Credit Facilities. The Company manages its risk to interest rate fluctuations through the use of derivative financial instruments. As such, the Company entered into an interest rate swap (notional amount of $75.0 million) during the year ended December 31, 2023, to mitigate the risk of adverse changes in benchmark interest rates on the Company's future interest payments.

All derivative instruments are carried at fair value in our consolidated balance sheets. The following table presents the fair values of the Company’s derivative instruments that were designated and qualified as part of a hedging relationship (in millions):


		Fair Value (1)
Derivatives Designated as Hedging Instruments	Balance Sheet Location	December 31, 2024		December 31, 2023
Assets:
Accrued interest receivable on cross-currency rate swaps	Prepaid expenses and other currents assets	$	0.1	$	0.1
Interest rate swap	Other non-current assets	0.3		0.1
Total assets		$	0.4	$	0.2
Liabilities:
Cross-currency rate swap	Accrued expenses and other current liabilities	3.4		$	10.7
Cross-currency rate swap	Other non-current liabilities	4.7		12.6
Total liabilities		$	8.1	$	23.3
(1) Refer to Note 17, Fair Value Measurements, for additional information related to the estimated fair value.

Counterparty Credit Risk

Outstanding financial derivative instruments expose the Company to credit loss in the event of nonperformance by the counterparties to the derivative agreements. The Company's credit exposure related to these financial instruments is represented by the notional amount of the hedging instruments. The Company manages its exposure to counterparty credit risk through minimum credit standards, diversification of counterparties, and procedures to monitor concentrations of credit risk. The Company's derivative instruments are with financial institutions of investment grade or better. Counterparty credit risk will be monitored through periodic review of counterparty bank’s credit ratings and public financial filings. Based on these factors, the Company considers the risk of counterparty default to be minimal.

Cash Flow Hedging Strategy

The Company uses cash flow hedges to minimize the variability in cash flows of assets or liabilities or forecasted transactions caused by fluctuations in interest rates. The changes in the fair values of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive loss (“AOCL”) and are reclassified into the line item in our Consolidated Statements of Operations in which the hedged items are recorded in the same period the hedged items affect earnings. The changes in the fair values of hedges that are determined to be ineffective are immediately reclassified from AOCL into earnings. The maximum length of time for which the Company hedges its exposure to the variability in future cash flows is three years.

During the year ended December 31, 2024, the interest rate swap resulted in gains of $0.2 million recognized in other comprehensive income ("OCI"). Gains of $1.0 million were recognized in income through interest expense and reclassified from OCI during the same periods. In addition, the Company did not have any ineffectiveness related to the cash flow hedge during the year ended December 31, 2024. The cash inflows and outflows associated with the Company’s derivative contracts designated as cash flow hedges are classified as financing activities in our Consolidated Statements of Cash Flows.

Hedges of Net Investments in Foreign Operations Strategy

The Company uses fixed-to-fixed cross-currency rate swaps ("CCRS") to protect the net investment on pre-tax basis in the Company’s EUR-denominated operations against changes in spot exchange rates. For derivative financial instruments that are designated and qualify as hedges of net investments in foreign operations, the changes in the fair values of the derivative financial instruments are recognized in net investment hedges adjustments, a component of accumulated other comprehensive loss ("AOCL"), to offset the changes in the values of the net investments being hedged. Any ineffective portions of net investment hedges are reclassified from AOCL into earnings during the period of change.

The following table summarizes the notional values and pretax impact of changes in the fair values of instruments designated as net investment hedges (in millions):


	Notional Amount				Gain (Loss) Recognized in AOCL
	As of				Fiscal Year Ended December 31, 2024		Fiscal Year Ended December 31, 2023		Fiscal Year Ended December 31, 2022
	December 31, 2024		December 31, 2023
Cross-currency rate swaps	€	238.8	€	238.8	$	15.2	$	(10.4)	$	(12.9)
Total	€	238.8	€	238.8	$	15.2	$	(10.4)	$	(12.9)

During the fourth quarter of 2024, the Company amended one of the cross-currency rate swaps (notional amount of 123.2 million euros) to extend the maturity to December 31, 2025. The cross-currency rate swap was dedesignated from previous hedge accounting, and then redesignated as a net investment hedge, resulting in an immaterial off-market impact to the excluded interest component which will be recognized systematically into earnings over the life of the derivative.

The Company did not reclassify any gains or losses related to net investment hedges from AOCL into earnings during the years ended December 31, 2024 and December 31, 2023. In addition, the Company did not have any ineffectiveness related to net investment hedges during the years ended December 31, 2024 and December 31, 2023. The cash inflows and outflows associated with the Company’s derivative contracts designated as net investment hedges are classified as investing activities in our consolidated statements of cash flows.