Derivative Financial Instruments

12 Months Ended

Dec. 28, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

As a result of its operating and financing activities, the Company is exposed to market risks from changes in foreign currency exchange rates and interest rates. These market risks may adversely affect the Company’s operating results, cash flows and financial position. The Company seeks to manage risk from changes in foreign currency exchange rates through the use of forward contracts or cross currency swaps or both, and from time to time, may use interest rate swaps to manage the risk of changes in interest rates. The Company’s forward contracts are not collateralized and are entered into with large, reputable financial institutions that are monitored for counterparty risk. Refer to Note 8 for additional information on the fair value of our derivative financial instruments.

Foreign currency contracts

The Company operates in foreign countries, which exposes it to market risk associated with foreign currency exchange rate fluctuations. The Company uses forward contracts to manage its exposure to fluctuations in the U.S. dollar (“USD”) – Canadian dollar (“CAD”) and may also use cross currency swaps for the same reason. Forward contracts lock in the exchange rate for a portion of the estimated cash flows of the Company’s Canadian operations. As of December 28, 2024 and December 30, 2023, the Company’s forward contracts had USD equivalent gross notional amounts of $102.5 million and $33.2 million, respectively. In April 2024, the Company terminated its cross currency swaps, resulting in net proceeds of $28.1 million. These cross currency swaps were not designated in hedging relationships. Cross currency swaps with notional amounts of $275.0 million were outstanding at December 30, 2023.

Interest rate swap contracts

The Company’s market risk is affected by changes in interest rates. The Company’s Senior Secured Credit Facilities bear interest based on market rates plus an applicable margin. Because the interest rate on the Company’s floating-rate debt is tied to market rates, the Company may from time to time manage its exposure to interest rate movements by effectively converting a portion of its floating-rate debt to fixed-rate debt using interest rate swaps. Interest rate swaps, as used by the Company, involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount. The Company previously entered into two interest rate swaps that were designated as cash flow hedges. In April 2024, the Company terminated its interest rate swaps, resulting in net proceeds of $10.3 million. All amounts deferred into accumulated other comprehensive income prior to termination will be amortized to interest expense through May 2025, being the original maturity date of the interest rate swaps. Interest rate swaps with notional amounts of $275.0 million were outstanding at December 30, 2023.

The fair values of cross currency swap contracts, forward contracts and interest rate swap contracts were as follows:


(in thousands)	Balance Sheet Location	December 28, 2024		December 30, 2023
Derivatives not designated as hedging instruments:
Forward contracts	Derivative asset – current	$	4,574	$	—

Cross currency swaps	Derivative asset – non-current	—		20,831
Total derivatives in an asset position		$	4,574	$	20,831
Forward contracts	Accounts payable and accrued liabilities	$	—	$	384
Cross currency swaps	Accounts payable and accrued liabilities	—		466
Total derivatives in a liability position		$	—	$	850
Derivatives designated as hedging instruments:
Interest rate swaps	Derivative asset – current	$	—	$	7,691
Interest rate swaps	Derivative asset – non-current	—		2,688
Total derivatives in an asset position		$	—	$	10,379



Total deferred gain	Accumulated other comprehensive income	$	4,432	$	13,045

The impact of derivative financial instruments on the Consolidated Statements of Operations and Comprehensive Income was as follows:


(in thousands)	Fiscal Year
(in thousands)	2024		2023		2022
Gain (loss) on forward contracts recognized in (loss) gain on foreign currency, net	$	5,401	$	(373)	$	802
Gain (loss) on cross currency swaps recognized in (loss) gain on foreign currency, net	$	7,647	$	(2,770)	$	8,416
Gain on interest rate swaps recognized in interest expense, net	$	10,977	$	11,110	$	2,169

The table below presents the effect of cash flow hedge accounting on other comprehensive (loss) income, net of tax:


(in thousands)	Fiscal Year
(in thousands)	2024		2023		2022
Gain recognized in other comprehensive (loss) income	$	2,364	$	3,141	$	20,678
Gain reclassified from accumulated other comprehensive income into net income	$	10,977	$	11,110	$	2,205

Amounts reclassified from accumulated other comprehensive income into net income are recognized in interest expense, net in the Consolidated Statements of Operations and Comprehensive Income. Within the next 12 months, the Company estimates that an additional $4.4 million of gains recognized within accumulated other comprehensive income will be reclassified as a decrease in interest expense, net.