Derivatives

9 Months Ended

Sep. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Note 7—Derivatives

We are directly and indirectly affected by changes in foreign currency, which may adversely impact our financial performance and are referred to as “market risks.” When deemed appropriate, we use derivatives as a risk management tool to mitigate the potential impact of certain market risks. We do not enter into derivative financial instruments for trading purposes.

We enter into foreign currency contracts to manage our foreign exchange exposure related to certain balance sheet items that do not meet the requirements for hedge accounting. These derivative instruments are adjusted to fair value at the end of each period through earnings. The gain or loss recorded on these instruments is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability.

We pay interest on our Credit Agreement which fluctuates based on changes in our benchmark interest rates. In order to mitigate the risk of increases in benchmark rates on our term loans, we entered into an interest rate swap agreement whereby we agree to exchange with the counterparty, at specified intervals, the difference between fixed and variable amounts calculated by reference to the notional amount. The interest rate swaps were designated as cash flow hedges. Cash flows related to the interest rate swap agreement are included in interest expense, net.

We determine the fair value of our foreign currency derivatives and interest rate swaps based on observable market-based inputs or unobservable inputs that are corroborated by market data. We do not view the fair value of our derivatives in isolation, but rather in relation to the fair values or cash flows of the underlying exposure. All derivatives

are carried at fair value in our consolidated balance sheets. We consider the risk of counterparty default to be minimal. We report cash flows from our hedging instruments in the same cash flow statement category as the hedged items.

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of September 30, 2024:

	Notional			Derivative Assets			Derivative Liabilities
	Amount		Maturity Date	Classification	Fair Value		Classification	Fair Value
Cash flow hedges
Interest rate swaps	$	300,000	March 2027	Other assets, net	$	3,451	Other liabilities	$	—
Economic (non-designated) hedges
Foreign currency contracts	$	33,350	October 2024	Other current assets	$	106	Other current liabilities	$	8

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of December 31, 2023:

	Notional			Derivative Assets			Derivative Liabilities
	Amount		Maturity Date	Classification	Fair Value		Classification	Fair Value
Cash flow hedges
Interest rate swaps	$	350,000	March 2027	Other assets, net	$	8,447	Other liabilities	$	—
Economic (non-designated) hedges
Foreign currency contracts	$	78,436	January 2024	Other current assets	$	1,043	Other current liabilities	$	—

The notional amount of the interest rate swaps represents the amount in effect at the end of the period. Based on contractual terms, the notional amount will decrease in increments of $50 million on the last business day of March of each year until the maturity date.

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and nine months ended September 30, 2024:

Total Amount of Expense

Amount of (Loss) Gain

Line Items Presented in the

Amount of Gain Reclassified

Recognized in Other

Location of Gain

Consolidated Statement of

from Accumulated Other

Comprehensive Income

Reclassified from

Operations in Which the

Comprehensive Loss into

(Loss)

Accumulated Other

Effects are Recorded

Net Loss

Three months ended

Nine months ended

Comprehensive Loss

Three months ended

Nine months ended

Three months ended

Nine months ended

September 30, 2024

September 30, 2024

into Income

September 30, 2024

September 30, 2024

September 30, 2024

September 30, 2024

Interest rate swaps

$

(4,872)

$

1,283

Interest expense, net

$

36,554

$

108,108

$

1,757

$

6,280

The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and nine months ended September 30, 2023:

Total Amount of Expense

Amount of Gain

Line Items Presented in the

Amount of Gain Reclassified

Recognized in Other

Location of Gain

Consolidated Statement of

from Accumulated Other

Comprehensive Income

Reclassified from

Operations in Which the

Comprehensive Loss into

(Loss)

Accumulated Other

Effects are Recorded

Net Loss

Three months ended

Nine months ended

Comprehensive Loss

Three months ended

Nine months ended

Three months ended

Nine months ended

September 30, 2023

September 30, 2023

into Income

September 30, 2023

September 30, 2023

September 30, 2023

September 30, 2023

Interest rate swaps

$

3,621

$

8,026

Interest expense, net

$

38,127

$

121,053

$

2,569

$

7,080

The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.

For the three and nine months ended September 30, 2024, we recognized a gain of $4.2 million and a loss of $1.0 million associated with our economic (non-designated) foreign currency contracts. For the three and nine months ended September 30, 2023, we recognized losses of $2.4 million and $3.3 million associated with our economic (non-designated) foreign currency contracts.

We recorded the change in fair value of derivative instruments and the remeasurement adjustment of the foreign currency denominated asset or liability in other operating expense, net for our foreign exchange contracts.