DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 28, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Swaps

We maintain interest rate swap agreements (“Initial Swaps”) that have a remaining notional amount of $212.5, cover the period through November 2024, and effectively convert this portion of the borrowings under our senior credit facilities to a fixed rate of 1.077%, plus the applicable margin. In September 2024, commensurate with the Second Amendment, we entered into additional interest rate swap agreements (“Additional Swaps”). The Additional Swaps have a notional amount of $531.4, cover the period from December 2024 to June 2026, and effectively convert this portion of the borrowings under our senior credit facilities to a fixed rate of 3.58%, plus the applicable margin. We have designated, and are accounting for, our Initial Swaps and Additional Swaps as cash flow hedges.

As of September 28, 2024 and December 31, 2023, the unrealized gain (loss), net of tax, recorded in accumulated other comprehensive income (“AOCI”) was $(0.3) and $5.7, respectively. In addition, as of September 28, 2024 and December 31, 2023, the fair value of our interest rate swap agreements was a net liability of $0.6 (with $2.1 recorded as a current asset, $0.3 as a current liability, and $2.4 as a non-current liability) and a current asset of $7.5, respectively. Changes in the fair value of our interest rate swap agreements are reclassified into earnings, as a component of interest expense, when the forecasted transaction impacts earnings.

Currency Forward Contracts

We manufacture and sell our products in a number of countries and, as a result, are exposed to movements in foreign currency exchange rates. Our objective is to preserve the economic value of non-functional currency-denominated cash flows and to minimize the impact of changes as a result of currency fluctuations. Our principal currency exposures relate to the South African Rand, British Pound Sterling, Canadian Dollar, and Euro.

From time to time, we enter into forward contracts to manage the exposure on contracts with forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries (“FX forward contracts”). Certain of our FX forward contracts are designated as cash flow hedges. Changes in these derivatives’ fair value are included in AOCI and are reclassified into earnings as a component of revenues or cost of products sold, as applicable, when the forecasted transaction impacts earnings. In addition, if the forecasted transaction is no longer probable, the cumulative change in the derivatives’ fair value is recorded into earnings in the period in which the transaction is no longer considered probable of occurring.

We had FX forward contracts with an aggregate notional amount of $14.0 and $9.4 outstanding as of September 28, 2024 and December 31, 2023, respectively, with all of the $14.0 scheduled to mature within one year. There were no unrealized

gains/losses recorded in AOCI related to FX forward contracts designated as cash flow hedges as of September 28, 2024. The fair value of our FX forward contracts was less than $0.1 at September 28, 2024 and December 31, 2023.

In addition to the above, we entered FX forward contracts associated with the Settlement Agreement, to mitigate our exposure to fluctuations in the South African Rand, with a notional amount of South African Rand 480.9 (or $24.9 at the time of execution) and a fair value of $1.3 at December 31, 2023, which was included within “Assets of DBT and Heat Transfer” on the condensed consolidated balance sheet. These FX forward contracts matured during the quarter ended September 28, 2024 commensurate with the final payment under the Settlement Agreement, resulting in cash received of $2.0 presented within “Net cash used in discontinued operations” within the condensed consolidated statement of cash flows for the nine months ended September 28, 2024. Refer to Note 3 for additional details.