v3.26.1
Derivative Instruments and Hedging Activities
 9 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Derivative Instruments and Hedging Activities
During the nine months ended June 30, 2026, we did not purchase or hold any derivative instruments for trading or speculative purposes. See Note 4, Fair Value Measurements, for the classification and fair value of our derivative instruments.
Designated Cash Flow Hedges
Foreign Currency Forwards
We regularly enter into foreign currency forwards to mitigate our exposure to exchange rate changes on forecasted inventory purchases in U.S. dollars by our foreign subsidiaries. At June 30, 2026, we held forwards, which expire ratably through September 30, 2026, with notional amounts, based upon exchange rates at June 30, 2026, as follows (in thousands):
Notional CurrencyNotional Amount
Mexican Peso$4,846 
Canadian Dollar2,415 
Total$7,261 
The changes in fair value related to these foreign currency forwards are recorded quarterly in AOCL. As the forwards are exercised, the realized gains or losses are recognized in COGS, based on inventory turns, in our condensed consolidated statements of earnings. For the three months ended June 30, 2026 and 2025, we recognized a net loss of $0.2 million and a net gain of $0.6 million, respectively. For the nine months ended June 30, 2026 and 2025, we recognized a net loss of $0.7 million and a net gain of $0.7 million, respectively. Based on valuations and exchange rates as of June 30, 2026, we expect to reclassify net losses of approximately $0.7 million from AOCL to COGS over the next 12 months.
Interest Rate Swap
We had a three-year interest rate swap agreement with an initial notional amount of $200 million (the “Interest Rate Swap”) that matured in April 2026. The Interest Rate Swap was used to mitigate the exposure to higher interest rates in connection with our Term Loan B due in 2030. The Interest Rate Swap involved fixed monthly payments at the contract rate of 3.705% in exchange for a floating interest payment based on the one-month Adjusted Term SOFR Rate. The Interest Rate Swap was designated as a cash flow hedge. Changes in the fair value of the Interest Rate Swap were recorded quarterly, net of income tax, in AOCL.
During the term of the agreement, we recognized either income or expense, based on the position of the interest rates, in interest expense on our condensed consolidated statements of earnings related to the Interest Rate Swap. For the three months ended June 30, 2025, we recognized income of $0.2 million. For the nine months ended June 30, 2026 and 2025, we recognized income of $0.1 million and $1.1 million, respectively.
Non-Designated Derivative Instruments
We also use foreign exchange forward contracts to mitigate our exposure to exchange rate fluctuations related to certain intercompany balances that are not considered permanently invested. At June 30, 2026, we held forward contracts, which mature in July and October 2026, with notional amounts, based upon exchange rates at June 30, 2026, as follows (in thousands):
Notional CurrencyNotional Amount
British Pound$47,858 
Euro13,177 
Canadian Dollar9,192 
Total$70,227 
Changes in the fair value of the forward contracts, as well as realized gains or losses upon settlement, are recorded in SG&A expenses. For the three months ended June 30, 2026 and 2025, the effects of foreign exchange contracts on our condensed consolidated financial statements were net losses of $0.3 million and $1.3 million, respectively. For the nine months ended June 30, 2026 and 2025, the effects of foreign exchange contracts on our condensed consolidated financial statements were net losses of $0.2 million and $0.3 million, respectively.