v3.25.2
Derivative Financial Instruments
 6 Months Ended
Jun. 28, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
As a result of its operating and financing activities, the Company is exposed to market risks from changes in foreign currency exchange rates and interest rates. These market risks may adversely affect the Company’s operating results, cash flows and financial position. The Company seeks to manage risk from changes in foreign currency exchange rates through the use of forward contracts or cross currency swaps or both, and from time to time, may use interest rate swaps to manage the risk of changes in interest rates. The Company’s forward contracts are not collateralized and are entered into with large, reputable financial institutions that are monitored for counterparty risk. Refer to Note 5. Fair Value Measurements for information on the fair value of our derivative financial instruments.
Foreign currency contracts
The Company operates in foreign countries, which exposes it to market risk associated with foreign currency exchange rate fluctuations. The Company uses forward contracts to manage its exposure to fluctuations in the U.S. dollar (“USD”) – Canadian dollar (“CAD”) and may also use cross currency swaps for the same reason. Forward contracts lock in the exchange rate for a portion of the estimated cash flows of the Company’s Canadian operations. As of June 28, 2025 and December 28, 2024, the Company’s forward contracts had USD equivalent notional amounts of $105.4 million and $102.5 million, respectively. In April 2024, the Company terminated its cross currency swaps, resulting in net proceeds of $28.1 million. These cross currency swaps were not designated in hedging relationships.
Interest rate swap contracts
The Company’s market risk is affected by changes in interest rates. The Company’s Senior Secured Credit Facilities bear interest based on market rates plus an applicable margin. Because the interest rate on the Company’s floating-rate debt is tied to market rates, the Company may from time to time manage its exposure to interest rate movements by effectively converting a portion of its floating-rate debt to fixed-rate debt using interest rate swaps. Interest rate swaps, as used by the Company, involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount. The Company previously entered into two interest rate swaps that were designated as cash flow hedges. In April 2024, the Company terminated its interest rate swaps, resulting in net proceeds of $10.3 million. All amounts deferred into accumulated other comprehensive income prior to termination have been amortized to interest expense, net through May 2025, being the original maturity date of the interest rate swaps.
The fair value of forward contracts were as follows:
(in thousands)Balance Sheet LocationJune 28, 2025December 28, 2024
Forward contracts not designated as hedging instrumentsDerivative asset – current$24 $4,574 
Forward contracts not designated as hedging instrumentsAccounts payable and accrued liabilities$1,881 $— 
The impact of derivative financial instruments on the unaudited interim Condensed Consolidated Statements of Operations and Comprehensive Income was as follows:
Thirteen Weeks EndedTwenty-Six Weeks Ended
(in thousands)June 28, 2025June 29, 2024June 28, 2025June 29, 2024
Loss (gain) on forward contracts recognized in (gain) loss on foreign currency, net$4,248 $(189)$4,593 $(460)
Gain on cross currency swaps recognized in (gain) loss on foreign currency, net$— $(2,033)$— $(7,647)
Gain on interest rate swaps recognized in interest expense, net$(1,796)$(2,680)$(4,432)$(5,704)
The table below presents the effect of cash flow hedge accounting on other comprehensive income (loss), net of tax:
Thirteen Weeks EndedTwenty-Six Weeks Ended
(in thousands)June 28, 2025June 29, 2024June 28, 2025June 29, 2024
Gain recognized in other comprehensive income (loss)$— $165 $— $2,364 
Gain reclassified from accumulated other comprehensive income into net income$1,796 $2,680 $4,432 $5,704 
As of May 2025, the entirety of the deferred gain recognized within accumulated other comprehensive income from the interest rate swap had been reclassified as a decrease in interest expense, net. As of December 28, 2024, the Company’s total deferred gain in accumulated other comprehensive income in the unaudited interim Condensed Consolidated Balance Sheets was $4.4 million. Amounts reclassified from accumulated other comprehensive income into net income are recognized in interest expense, net in the unaudited interim Condensed Consolidated Statements of Operations and Comprehensive Income.