Fair Value Measurement

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurement

Fair Value Measurement

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 - Unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2 - Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3 - Significant unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

Our financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities, pension assets and liabilities. The carrying value of these instruments approximates fair value as a result of the short duration of such instruments or due to the variability of the interest cost associated with such instruments.

Recurring Measurements

Foreign Currency Forward Exchange Contracts. Our derivative assets and liabilities represent foreign exchange contracts that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk and counterparty credit risk. Based on the utilization of these inputs, the derivative assets and liabilities are classified as Level 2. To

manage our risk for transactions denominated in Mexican Pesos and Czech Crown, we have entered into forward exchange contracts that are designated as cash flow hedge instruments, which are recorded in the Condensed Consolidated Balance Sheets at fair value. The gains and losses as a result of the changes in fair value of the hedge contract for transactions denominated in Mexican Pesos are deferred in accumulated other comprehensive loss and recognized in cost of revenues in the period the related hedge transactions are settled. As of June 30, 2024, hedge contracts for transactions denominated in Czech Crown were not designated as a hedging instruments; therefore, they are marked-to-market and the fair value of agreements is recorded in the Condensed Consolidated Balance Sheets with the offsetting gains and losses recognized in other (income) expense and recognized in cost of revenues in the period the related hedge transactions are settled in the Condensed Consolidated Statements of Operations.

Interest Rate Swaps. To manage our exposure to variable interest rates, we have entered into interest rate swaps to exchange, at a specified interval, the difference between fixed and variable interest amounts calculated by reference to an agreed upon notional principal amount. The interest rate swaps are intended to mitigate the impact of rising interest rates on the Company and covers approximately 50% of outstanding debt under the Term Loan Facility. Any changes in fair value are included in earnings or deferred through Accumulated other comprehensive loss, depending on the nature and effectiveness of the offset. Any ineffectiveness in a cash flow hedging relationship is recognized immediately in earnings in the consolidated statements of operations.

The fair values of our derivative assets and liabilities measured on a recurring basis are categorized as follows: 

	June 30, 2024								December 31, 2023
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Foreign exchange contract designated as hedging instruments	$	151	$	—	$	151	$	—	$	1,318	$	—	$	1,318	$	—
Interest rate swap agreement	$	1,889	$	—	$	1,889	$	—	$	1,073	$	—	$	1,073	$	—
Liabilities:
Foreign exchange contract designated as hedging instruments	$	1,704	$	—	$	1,704	$	—	$	—	$	—	$	—	$	—
Foreign exchange contract not designated as hedging instruments	$	216	$	—	$	216	$	—	$	304	$	—	$	304	$	—

The following table summarizes the notional amount of our open foreign exchange contracts:

	June 30, 2024				December 31, 2023
	U.S. $ Equivalent		U.S. $ Equivalent Fair Value		U.S. $ Equivalent		U.S. $ Equivalent Fair Value
Commitments to buy or sell currencies - Foreign exchange contract designated as hedging instruments	$	83,055	$	85,424	$	56,741	$	58,094
Commitments to buy or sell currencies - Foreign exchange contract not designated as hedging instruments	$	13,655	$	14,197	$	16,608	$	16,806

The following table summarizes the fair value and presentation of derivatives in the Condensed Consolidated Balance Sheets: 

	Derivative Asset
	Balance Sheet Location	Fair Value
		June 30, 2024		December 31, 2023
Foreign exchange contract designated as hedging instruments	Other current assets	$	120	$	1,179
Foreign exchange contract designated as hedging instruments	Other assets, net	$	31	$	139
Interest rate swap agreement	Other assets, net	$	1,889	$	1,073

	Derivative Liability
	Balance Sheet Location	Fair Value
		June 30, 2024		December 31, 2023
Foreign exchange contract designated as hedging instruments	Accrued liabilities and other	$	1,548	$	—
Foreign exchange contract designated as hedging instruments	Other long-term liabilities	$	156	$	—
Foreign exchange contracts not designated as hedging instruments	Accrued liabilities and other	$	213	$	304
Foreign exchange contracts not designated as hedging instruments	Other long-term liabilities	$	3	$	—

	Derivative Equity
	Balance Sheet Location	Fair Value
		June 30, 2024		December 31, 2023
Foreign exchange contracts designated as hedging instruments	Accumulated other comprehensive loss	$	(796)	$	1,354
Interest rate swap agreements	Accumulated other comprehensive loss	$	3,692	$	3,484

The following table summarizes the effect of derivative instruments on the Condensed Consolidated Statements of Operations:

		Three Months Ended June 30,				Six Months Ended June 30,
		2024		2023		2024		2023
	Location of Gain (Loss) on Derivatives Recognized in Income (Loss)	Amount of Gain (Loss) on Derivatives Recognized in Income (Loss)				Amount of Gain (Loss) on Derivatives Recognized in Income (Loss)
Foreign exchange contracts designated as hedging instruments	Cost of revenues	$	513	$	1,242	$	602	$	1,693
Interest rate swap agreement	Interest expense	$	403	$	365	$	819	$	630
Interest rate swap agreement settled in 2022	Interest expense	$	188	$	188	$	377	$	377
Foreign exchange contracts	Other (income) expense	$	304	$	(157)	$	98	$	312

We consider the impact of our credit risk on the fair value of the contracts, as well as our ability to honor obligations under the contract.

Other Fair Value Measurements

The fair value of long-term debt obligations is based on a fair value model utilizing observable inputs. Based on these inputs, our long-term debt fair value as disclosed is classified as Level 2. The carrying amounts and fair values of our long-term debt obligations are as follows:

	June 30, 2024				December 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term loan and security agreement 1	$	134,958	$	133,946	$	141,514	$	139,213
Revolving credit facility	$	7,000	$	7,000	$	—	$	—

1.Presented in the Condensed Consolidated Balance Sheets as the current portion of long-term debt of $17.5 million and long-term debt of $117.5 million as of June 30, 2024 and current portion of long-term debt of $15.3 million and long-term debt of $126.2 million as of December 31, 2023.