Derivative Instruments and Hedging Activities

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Note 6 — Derivative Instruments and Hedging Activities

From time to time, the Company uses derivative instruments, including foreign currency forward contracts and commodity futures contracts, to manage its exposures to foreign exchange and commodity prices. Commodity futures contracts are intended and effective as hedges of market price risks associated with the anticipated purchase of certain raw materials (primarily sugar). Foreign currency forward contracts are intended and effective as hedges of the Company’s exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of products manufactured in Canada and sold in the United States, and periodic equipment purchases from foreign suppliers denominated in a foreign currency. The Company does not engage in trading or other speculative use of derivative instruments.

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Statement of Financial Position. Derivative assets are recorded in other receivables and derivative liabilities are recorded in accrued liabilities. The Company uses hedge accounting for its foreign currency and commodity derivative instruments as discussed above. Derivatives that qualify for hedge accounting are designated as cash flow hedges by formally documenting the hedge relationships, including identification of the hedging instruments, the hedged items and other critical terms, as well as the Company’s risk management objectives and strategies for undertaking the hedge transaction.

Changes in the fair value of the Company’s cash flow hedges are recorded in accumulated other comprehensive loss, net of tax, and are reclassified to earnings in the periods in which earnings are affected by the hedged item. Substantially all amounts reported in accumulated other comprehensive loss for commodity derivatives are expected to be reclassified to cost of goods sold. Approximately $312, $217 and $30 of this accumulated comprehensive loss is expected to be reclassified to earnings in 2024, 2025 and 2026, respectively. Approximately $29 reported in accumulated other comprehensive loss for foreign currency derivatives is expected to be reclassified to other income, net in 2024.  

The following table summarizes the Company’s outstanding derivative contracts and their effects on its Condensed Consolidated Statements of Financial Position at March 31, 2024, December 31, 2023 and March 31, 2023:

	March 31, 2024
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency derivatives	$	9,646	$	25	$	(54)
Commodity derivatives		24,413		211		(770)
Total derivatives			$	236	$	(824)
	December 31, 2023
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency derivatives	$	16,337	$	302	$	—
Commodity derivatives		28,247		16		(2,542)
Total derivatives			$	318	$	(2,542)
	March 31, 2023
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency derivatives	$	17,260	$	13	$	(246)
Commodity derivatives		189		51		—
Total derivatives			$	64	$	(246)

The effects of derivative instruments on the Company’s Condensed Consolidated Statements of Earnings and Retained Earnings and the Condensed Consolidated Statements of Comprehensive Earnings for periods ended March 31, 2024 and March 31, 2023 are as follows:

	For Quarter Ended March 31, 2024
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency derivatives	$	(358)	$	(26)	$	—
Commodity derivatives		1,558		(409)		—
Total	$	1,200	$	(435)	$	—
	For Quarter Ended March 31, 2023
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency derivatives	$	(39)	$	(88)	$	—
Commodity derivatives		134		93		—
Total	$	95	$	5	$	—