The Company is exposed to market risks, including the effect of changes in interest rates, and may use derivatives to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading or speculative purposes. The Company may elect to designate certain derivatives as hedging instruments under ASC 815, Derivatives and Hedging. The Company formally documents all relationships between designated hedging instruments and hedged items, as well as its risk management and strategy for undertaking hedge transactions.

Cash Flow Hedges—For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative instrument is reported as a component of other comprehensive income or loss and reclassified into current earnings in the same period during which the hedged transaction affects earnings and is presented in the same line item as the earnings effect of the hedged item, primarily within interest expense in the unaudited condensed consolidated statements of operations and comprehensive (loss) income. The Company classifies the cash flows at settlement from these designated cash flow hedges in the same category as the cash flows from the related hedged items, primarily within the cash provided by operations component of the unaudited condensed consolidated statements of cash flows.

In October 2022, the Company entered into an interest rate cap contract on approximately half of the variable rate debt under the senior secured credit facilities. The cap commenced on December 31, 2022 and provided protection in the form of variable payments from a counterparty in the event that the three-month SOFR increased above 4.85%. The notional amount of the derivative instrument was $661.2 million as of December 30, 2023 and $659.8 million immediately prior to its expiration on June 28, 2024 and decreased quarterly as principal payments were made on the First Lien Term Loan Facility. The Company paid initial costs of $5.0 million for the interest rate cap. The Company elected to exclude the change in the time value of the interest rate cap from the assessment of hedge effectiveness and amortized the initial value of the premium over the life of the contract. The premium amortization was recognized in interest expense in the unaudited condensed consolidated statements of operations and comprehensive (loss) income. Payment and amortization of the interest rate cap premium was included within prepaid expense and other current assets as well as other assets within cash flows from operating activities on the Company’s unaudited condensed consolidated statements of cash flows. The derivative was considered highly effective through its expiration on June 28, 2024.

In January 2024, the Company entered into a pay-fixed-receive-float interest rate swap contract, with a fixed interest rate of 3.85% per annum. Additionally, in February 2024, the Company entered into two pay-fixed-receive-float interest rate swap contracts, with fixed interest rates of 3.89% per annum. The contracts were executed in order to hedge the interest rate risk on a portion of the variable debt under the Credit Agreement. The Company receives variable amounts of interest from a counterparty at the greater of three-month SOFR or 0.50% per annum and recognizes the amount reclassified into current earnings of the interest rate swaps in interest expense in the unaudited condensed consolidated statements of operations and

comprehensive (loss) income. The interest rate swap contracts commenced on June 28, 2024 and will mature on December 31, 2026, with a total notional amount of $800.0 million through December 31, 2026. As of September 28, 2024, the derivatives are considered highly effective. The Company estimates that $0.5 million, before income taxes, of deferred gains recognized within accumulated other comprehensive loss as of September 28, 2024 will be reclassified as a decrease in interest expense within the next 12 months. Actual amounts reclassified into net income during the next 12 months are dependent on changes in the three-month SOFR.

The following table presents the amounts affecting the unaudited condensed consolidated statements of operations and comprehensive (loss) income (in thousands):


	(Loss) Gain Recognized in Other Comprehensive (Loss) Income						(Loss) Gain Recognized in Other Comprehensive (Loss) Income
	Three Months Ended						Nine Months Ended
	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Derivatives designated as cash flow hedges
Interest rate derivative contracts	$	(17,564	)	$	(260	)	$	(6,681	)	$	1,707


	(Gain) Loss Reclassified from Accumulated Other Comprehensive (Loss) Income into Income					(Gain) Loss Reclassified from Accumulated Other Comprehensive (Loss) Income into Income
	Three Months Ended					Nine Months Ended
	September 28, 2024			September 30, 2023		September 28, 2024			September 30, 2023
Derivatives designated as cash flow hedges
Interest rate derivative contracts	$	(1,857	)	$	173	$	(1,792	)	$	1,570

Credit Risk—The Company is exposed to credit-related losses in the event of nonperformance by counterparties to hedging instruments. The counterparties to all derivative transactions are major financial institutions with at or above investment grade credit ratings. This does not eliminate the Company’s exposure to credit risk with these institutions; however, the Company’s risk is limited to the fair value of the instruments. The Company is not aware of any circumstance or condition that would preclude a counterparty from complying with the terms of the derivative contracts and will continuously monitor the credit worthiness of all its derivative counterparties for any significant adverse changes.