Derivatives and Hedging

9 Months Ended

Apr. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The fair value of our derivative instruments designated as cash flow hedges, and the associated notional amounts, presented on a pre-tax basis, were as follows:


	April 30, 2023						July 31, 2022
			Fair Value in		Fair Value in				Fair Value in		Fair Value in
			Other Current		Other Current				Other Current		Other Current
Cash Flow Hedges	Notional		Assets		Liabilities		Notional		Assets		Liabilities
Foreign currency forward contracts	$	—	$	—	$	—	$	33,997	$	—	$	80
Interest rate swap agreements	110,175		368		—		273,325		850		—
Total derivative financial instruments	$	110,175	$	368	$	—	$	307,322	$	850	$	80

The Company previously entered into interest rate swaps to convert a portion of the Company’s long-term debt from floating rate to fixed rate debt to partially hedge the interest rate risk related to the Company’s U.S. dollar term loan tranche that matures in February 2026. The notional amounts hedged will decrease on a quarterly basis to zero by August 1, 2023.

Effective August 1, 2022, the Company's foreign currency forward contracts used to exchange British Pounds Sterling ("GBP") for Euro were no longer designated as cash flow hedges and therefore excluded from the table above as of April 30, 2023.

Net Investment Hedges

The foreign currency transaction gains and losses on the Euro-denominated portion of the term loan, which is designated and effective as a hedge of the Company’s net investment in its Euro-denominated functional currency subsidiaries, are included as a component of the foreign currency translation adjustment. Losses, net of tax, included in the foreign currency translation adjustments were $4,901 for the three months ended April 30, 2023 and $25,813 for the nine months ended April 30, 2023. Gains, net of tax, included in the foreign currency translation adjustments were $23,189 for the three months ended April 30, 2022 and $50,817 for the nine months ended April 30, 2022.

There were no amounts reclassified out of accumulated other comprehensive income (“AOCI”) pertaining to the net investment hedge during the three and nine-month periods ended April 30, 2023 and April 30, 2022, respectively.

Derivatives Not Designated as Hedging Instruments

The Company has certain other derivative instruments which have not been designated as hedges. These other derivative instruments had a notional amount totaling approximately $33,251 and a fair value liability value of $651 as of April 30, 2023. These other derivative instruments had a notional amount totaling approximately $25,628 and a fair value liability of $1,077, as of July 31, 2022. For these derivative instruments, changes in fair value are recognized in earnings.

The total amounts presented in the Condensed Consolidated Statements of Income and Comprehensive Income due to changes in the fair value of the derivative instruments are as follows:


	Three Months Ended April 30,
	2023		2022
Gain (Loss) on Derivatives Designated as Cash Flow Hedges

Gain (Loss) recognized in Other Comprehensive Income, net of tax
Foreign currency forward contracts	$	—	$	411
Interest rate swap agreements (1)	(452)		3,209
Total gain (loss)	$	(452)	$	3,620

(1) Other comprehensive income (loss), net of tax, before reclassification from AOCI was $16 and $1,888 for the three months ended April 30, 2023 and 2022, respectively.


	Nine Months Ended April 30,
	2023		2022
Gain (Loss) on Derivatives Designated as Cash Flow Hedges

Gain (Loss) recognized in Other Comprehensive Income, net of tax
Foreign currency forward contracts	$	—	$	(209)
Interest rate swap agreements (2)	(367)		8,313
Total gain (loss)	$	(367)	$	8,104

(2) Other comprehensive income (loss), net of tax, before reclassification from AOCI was $734 and $3,290 for the nine months ended April 30, 2023 and 2022, respectively.


	Three Months Ended April 30,
	2023				2022
			Interest					Interest
	Sales		Expense			Sales		Expense
Gain (Loss) Reclassified from AOCI, Net of Tax
Foreign currency forward contracts	$	—	$	—		$	(261)	$	—
Interest rate swap agreements	—		468			—		(1,321)
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Gain (loss) recognized in income, net of tax
Foreign currency forward contracts	$	690	$	—		$	—	$	—

Interest rate swap agreements	—		11			—		335
Total gain (loss)	$	690	$	479		$	(261)	$	(986)


	Nine Months Ended April 30,
	2023				2022
			Interest					Interest
	Sales		Expense			Sales		Expense
Gain (Loss) Reclassified from AOCI, Net of Tax
Foreign currency forward contracts	$	(58)	$	—		$	(545)	$	—
Interest rate swap agreements	—		1,101			—		(5,023)
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Gain (loss) recognized in income, net of tax
Foreign currency forward contracts	$	2,636	$	—		$	—	$	—
Commodities swap agreements	(2,229)		—			—		—
Interest rate swap agreements	—		182			—		424
Total gain (loss)	$	349	$	1,283		$	(545)	$	(4,599)