Derivative Instruments

6 Months Ended

Jun. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Note 11 – Derivative Instruments

Certain divisions of the ALP segment are subject to risk from increases in the price of commodities (copper and aluminum) used in the production of inventory. To minimize this risk, futures contracts are entered into which are designated as cash flow hedges. At June 30, 2024, approximately 41%, or $2,495, of anticipated copper purchases over the next eight months and 56%, or $621, of anticipated aluminum purchases over the next six months are hedged. At June 30, 2023, approximately 50%, or $2,725, of anticipated copper purchases over the next nine months and 61%, or $695, of anticipated aluminum purchases over the next six months were hedged.

The Corporation periodically enters into purchase commitments to cover a portion of its anticipated natural gas and electricity usage. The commitments qualify as normal purchases and, accordingly, are not reflected on the condensed consolidated balance sheets. At June 30, 2024, the Corporation has purchase commitments covering approximately 4%, or $1,830, of anticipated natural gas usage through December 31, 2025 for two of its subsidiaries and approximately 10%, or $1,129, of anticipated electricity usage through December 31, 2025 for two of its subsidiaries. At June 30, 2023, the Corporation had purchase commitments covering approximately 23%, or $3,478, of anticipated natural gas usage through December 31, 2025 for two of its subsidiaries and approximately 19%, or $1,329, of anticipated electricity usage through December 31, 2025 for two of its subsidiaries. Purchases of natural gas and electricity under previously existing commitments equaled $854 and $1,833 for the three and six months ended June 30, 2024, respectively, and $904 and $1,437 for the three and six months ended June 30, 2023, respectively.

The Corporation previously entered into foreign currency purchase contracts to manage the volatility associated with euro-denominated progress payments to be made for certain machinery and equipment. Upon occurrence of an anticipated purchase and placement of the underlying fixed asset in service, the foreign currency purchase contract was settled and the change in fair value of the foreign currency purchase contract was deferred in accumulated other comprehensive loss and is being reclassified to earnings (depreciation and amortization expense) over the life of the underlying asset (approximately 15 years).

No portion of the existing cash flow hedges is considered to be ineffective, including any ineffectiveness arising from the unlikelihood of an anticipated transaction to occur. Additionally, no amounts have been excluded from assessing the effectiveness of a hedge.

The Corporation does not enter into derivative transactions for speculative purposes and, therefore, holds no derivative instruments for trading purposes.

Gain (loss) on foreign exchange transactions included in other expense – net equaled $302 and $(190) for the three and six months ended June 30, 2024, respectively, and $(1,244) and $(1,159) for the three and six months ended June 30, 2023, respectively.

The change in the fair value of the cash flow contracts is recorded as a component of accumulated other comprehensive loss. The balances as of June 30, 2024 and 2023 and the amounts recognized as and reclassified from accumulated other comprehensive loss for each of the periods are summarized below. Amounts are after tax where applicable. Certain amounts recognized as comprehensive

income (loss) or reclassified from accumulated other comprehensive loss have no tax effect due to the Corporation having a valuation allowance recorded against the deferred income tax assets for the jurisdiction where the income or expense is recognized.

Three Months Ended June 30, 2024	Beginning of the Period		Recognized			Reclassified		End of the Period
Foreign currency purchase contracts	$	75	$	-		$	8	$	67
Futures contracts – copper and aluminum		174		158			270		62
	$	249	$	158		$	278	$	129
Three Months Ended June 30, 2023
Foreign currency purchase contracts	$	102	$	-		$	8	$	94
Futures contracts – copper and aluminum		114		(278	)		65		(229	)
	$	216	$	(278	)	$	73	$	(135	)
Six Months Ended June 30, 2024
Foreign currency purchase contracts	$	81	$	-		$	14	$	67
Futures contracts – copper and aluminum		105		210			253		62
	$	186	$	210		$	267	$	129
Six Months Ended June 30, 2023
Foreign currency purchase contracts	$	108	$	-		$	14	$	94
Futures contracts – copper and aluminum		44		(100	)		173		(229	)
	$	152	$	(100	)	$	187	$	(135	)

The change in fair value reclassified or expected to be reclassified from accumulated other comprehensive loss to earnings is summarized below. All amounts are pre-tax.

	Location of Gain (Loss) in Statements	Estimated to be Reclassified in the Next 12 Months		Three Months Ended June 30,				Six Months Ended June 30,
	of Operations			2024		2023		2024		2023
Foreign currency purchase contracts	Depreciation and amortization	$	28	$	8	$	8	$	14	$	14
Futures contracts – copper and aluminum	Costs of products sold (excluding depreciation and amortization)	$	62	$	278	$	68	$	260	$	179