DERIVATIVES

3 Months Ended

Mar. 31, 2025

DERIVATIVES

DERIVATIVES

NOTE 12 — DERIVATIVES

The Company uses derivative instruments to manage exposures to currency exchange rates, interest rates and commodity prices arising in the normal course of business. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. Hedge ineffectiveness was immaterial in the three months ended March 31, 2025 and 2024.

The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with any individual counterparty was considered significant at March 31, 2025. The Company does not expect any counterparties to fail to meet their obligations.

Cash Flow Hedges

Certain foreign currency forward contracts are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $88,276 and $96,444 at March 31, 2025 and December 31, 2024, respectively.

The Company had interest rate forward starting swap agreements that were qualified and designated as cash flow hedges that were terminated during 2024. Upon termination of the contracts in 2024, the company had a gain of $25,852 recorded in AOCI that will be amortized to Interest expense, net over the life of the associated debt.

Net Investment Hedges

The Company has foreign currency forward contracts that qualify and are designated as net investment hedges. The dollar equivalent gross notional amount of these contracts was $354,894 and $319,450 at March 31, 2025 and December 31, 2024, respectively.

Derivatives Not Designated as Hedging Instruments

The Company has certain foreign exchange forward contracts that are not designated as hedges. These derivatives are held as economic hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was $380,684 and $421,754 at March 31, 2025 and December 31, 2024, respectively.

Fair values of derivative instruments in the Company’s Condensed Consolidated Balance Sheets consisted of the following:

	March 31, 2025								December 31, 2024
	Other		Other						Other		Other
	Current		Current		Other		Other		Current		Current		Other		Other
Derivatives by hedge designation	Assets		Liabilities		Assets		Liabilities		Assets		Liabilities		Assets		Liabilities
Designated as hedging instruments:
Foreign exchange contracts	$	1,131	$	822	$	—	$	—	$	1,663	$	2,972	$	—	$	—
Net investment contracts		—		8,479		—		—		10,276		—		—		—
Not designated as hedging instruments:
Foreign exchange contracts		893		1,330		—		—		1,560		4,251		—		—
Total derivatives	$	2,024	$	10,631	$	—	$	—	$	13,499	$	7,223	$	—	$	—

The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Income consisted of the following:

		Three Months Ended March 31,
Derivatives by hedge designation	Classification of gain (loss)	2025		2024
Not designated as hedges:
Foreign exchange contracts	Selling, general & administrative expenses	$	8,333	$	(1,615)

The effects of designated hedges on AOCI consisted of the following:

Total gain (loss) recognized in AOCI, net of tax	March 31, 2025		December 31, 2024
Foreign exchange contracts	$	394	$	(812)
Forward starting swap agreements		17,690		18,067
Net investment contracts		13,583		20,403

The Company expects a gain of $394 related to existing contracts to be reclassified from AOCI, net of tax, to earnings over the next 12 months as the hedged transactions are realized.

The effects of designated hedges on the Company’s Consolidated Statements of Income consisted of the following:

		Three Months Ended March 31,
	(Loss) gain recognized in the
Derivative type	Consolidated Statements of Income:	2025		2024
Foreign exchange contracts	Sales	$	(713)	$	839
	Cost of goods sold		361		232
Commodity contracts	Cost of goods sold		—		2
Forward starting swap agreements	Interest expense, net		689		—