Derivative Financial Instruments

3 Months Ended

Jul. 31, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Interest Rate Swap Contracts

The Company enters into interest rate swap contracts to manage variability in the amount of known or expected cash payments related to portions of its variable rate debt. The interest rate swaps are designated as cash flow hedges. Changes in fair value are recorded to other comprehensive income. The risk management objective in using interest rate swaps is to add stability to interest expense and to manage the Company's exposure to interest rate movements. The interest rate swaps economically convert a portion of the variable rate debt to fixed rate debt. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the contract agreements without exchange of the underlying notional amount. Realized gains or losses in connection with required interest payments on interest rate swaps are recorded in earnings, as a component of interest expense, net to offset variability in interest expense associated with the underlying debt's cash flows.

On May 28, 2021, the Company entered into four interest rate swaps with an aggregate notional amount of $200 million to hedge part of the variable rate interest payments under the Term Loan Facility. The interest rate swaps became effective on May 28, 2021 and terminated on May 30, 2025. The Company received floating interest payments monthly based on one-month SOFR and paid a fixed rate of 0.53% to the counterparty. For the three-month period ended July 31, 2025, $0.5 million of realized gains, net of deferred taxes, were reclassified out of accumulated other comprehensive income (loss) to interest expense, net due to interest received from and payments made to the swap counterparties. For the three-month period ended July 31, 2024, unrealized (losses), net of deferred taxes, of ($0.3) million were recorded in other comprehensive income, and $1.8 million, of realized gains, net of deferred taxes, were reclassified out of accumulated other comprehensive income (loss) to interest expense, net due to interest received from and payments made to the swap counterparties.

On April 29, 2025, the Company entered into five interest rate swaps with an aggregate notional amount of $200 million in year one and $150 million in year two to hedge part of the variable rate interest payments under the Term Loan Facility. The interest rate swaps became effective on May 30, 2025 and will terminate on May 31, 2027. The Company receives floating interest payments monthly based on one-month SOFR and pays a fixed rate of 3.40% to the counterparty. For the three-month period

ended July 31, 2025, unrealized gains, net of deferred taxes, of $1.2 million were recorded in other comprehensive income and $0.2 million of realized gains, net of deferred taxes, were reclassified out of accumulated other comprehensive income (loss) to interest expense, net, due to interest received from and payments made to the swap counterparties.

As of July 31, 2025, the Company anticipates reclassifying approximately $0.9 million of net hedging gains from accumulated other comprehensive income into earnings during the next 12 months to offset the variability of the hedged items during this period.

The fair value of the derivative instruments are included in other assets on the condensed consolidated balance sheets.

Foreign Exchange Forward Contracts

At July 31, 2025, the Company held a target accrual redemption forward agreement to purchase Mexican Pesos across 17 defined fixings. These fixings allow for U.S. dollars to be converted into Pesos at a rate of 18.25 Pesos to one U.S. Dollar. Cumulative profit is capped at an aggregate of approximately $1.8 million over the shorter of the life of the contract fixings or the utilization of the cap. If the spot rate is between 18.25 and 19.00 for a defined fixing then the Company purchases at the spot rate and the profit cap is not impacted. As of July 31, 2025, a liability of $1.5 million is recorded in other accrued expenses on the condensed consolidated balance sheets.

The Company entered into three forward contracts between January 2025 and July 2025 to purchase $265.8 million Mexican Pesos at a cost of $12.9 million with a forward rate between 19.49 and 22.09. The forward contracts are designated as a hedge of the forecasted expenses relating to Mexican Peso expenses from May 2026 to November 2026.

For the three-months ending July 31, 2025, unrealized gains, net of deferred taxes, were $0.3 million and were recorded in other comprehensive income. The transaction is to hedge Peso-denominated expenses against the risk of variability in foreign currency exchange rates between the Peso and U.S. Dollar.