v3.26.1
Derivative Instruments and Hedging Activities
 6 Months Ended
Jun. 28, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Derivative Instruments and Hedging Activities
Interest Rate Risk - The Company manages economic risks, including interest rate variability, primarily by managing the amount, sources and duration of its debt funding and through the use of derivative financial instruments. The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps.
Designated Hedges
Cash Flow Hedges of Interest Rate Risk - To manage its exposure to fluctuations in variable interest rates, in March 2024 and December 2023, the Company entered into 11 interest rate swap agreements with ten counterparties with an aggregate notional amount of $375.0 million and one and two-year tenors (the “2023 and 2024 Swap Agreements”). The Company had $100.0 million of interest rate swap agreements mature on December 31, 2024 and December 31, 2025, respectively, and $175.0 million of interest rate swap agreements mature on March 31, 2026.
In October 2025, the Company entered into an additional eight interest rate swap agreements with eight counterparties with an aggregate notional amount of $300.0 million and 12- and 21-month tenors (the “2025 Swap Transactions”, together with the 2023 and 2024 Swap Agreements, the “Swap Transactions”). The following are the terms of the remaining Swap Transactions:
NOTIONAL AMOUNTWEIGHTED AVERAGE FIXED INTEREST RATE (1)EFFECTIVE DATETERMINATION DATE
$100,000,000 3.37%December 31, 2025December 31, 2026
$200,000,000 3.18%March 31, 2026December 31, 2027
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(1)The weighted average fixed interest rate excludes the term SOFR adjustment and interest rate spread described below.

In connection with the Swap Transactions, the Company effectively converted its outstanding indebtedness based on the notional amount from a variable rate of SOFR, plus a term SOFR adjustment of 0.10% and a spread of 150 to 250 basis points, to the weighted average fixed interest rates within the table above, plus a term SOFR adjustment of 0.10% and a spread of 150 to 250 basis points. The Swap Transactions have an embedded floor of minus 0.10%.

The Swap Transactions have been designated and qualify as cash flow hedges, are recognized on the Company’s Consolidated Balance Sheets at fair value and are classified based on the instruments’ maturity dates. The Company estimates $1.6 million of interest income will be reclassified from Accumulated Other Comprehensive Income to Interest expense, net over the next 12 months related to the outstanding Swap Transactions.

The following table presents the fair value and classification of the Company’s Swap Transactions as of the periods indicated:
(dollars in thousands)CONSOLIDATED BALANCE SHEETS CLASSIFICATIONJUNE 28, 2026DECEMBER 28, 2025
Interest rate swaps - assetOther current assets, net$1,495 $208 
Interest rate swaps - assetOther assets, net862 — 
Total fair value of derivative instruments - assets (1)$2,357 $208 
Interest rate swaps - liabilityAccrued and other current liabilities$— $330 
Interest rate swaps - liabilityOther long-term liabilities, net— 87 
Total fair value of derivative instruments - liabilities (1)$— $417 
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(1)See Note 8 - Stockholders’ Equity for interest rate swaps impact on AOCI and Note 11 - Fair Value Measurements for fair value discussion of the interest rate swaps.

By utilizing the interest rate swaps, the Company is exposed to credit-related losses in the event that the counterparty fails to perform under the terms of the derivative contract. To mitigate this risk, the Company enters into derivative contracts with major financial institutions based upon credit ratings and other factors. The Company continually assesses the creditworthiness of its counterparties. As of June 28, 2026, all counterparties to the Swap Transactions performed in accordance with their contractual obligations.

The Swap Transactions contain provisions whereby the Company could be declared in default on its derivative obligations if the repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on indebtedness. As of June 28, 2026 and December 28, 2025, the Company has not posted any collateral related to the Swap Transactions.

The Company’s Swap Transactions are subject to master netting arrangements. As of June 28, 2026, the Company elected not to offset derivative positions in its Consolidated Balance Sheet with the same counterparty under the same agreement.
Non-Designated Hedges

The Company entered into foreign currency forward contracts to partially offset the foreign currency exchange gains and losses generated by the Brazilian Reais rate risk associated with the purchase price installment payments from the Brazil Sale Transaction. During the thirteen weeks ended December 28, 2025, the Company received the final installment payment related to the Brazil Sale Transaction and the foreign currency forward contracts matured.
The following table summarizes the effects of the Company’s foreign exchange forward contracts on the Consolidated Statements of Operations and Comprehensive Income for the periods indicated:
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME CLASSIFICATIONTHIRTEEN WEEKS ENDEDTWENTY-SIX WEEKS ENDED
(dollars in thousands)JUNE 29, 2025JUNE 29, 2025
Loss on foreign currency forward contracts (1)General and administrative$8,461 $18,711 
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(1)The loss on foreign currency forward contracts, which includes costs in connection with the forward contracts, is partially offset within General and administrative expense by foreign currency exchange gains of $6.2 million and $14.2 million for the thirteen and twenty-six weeks ended June 29, 2025, respectively, related to the installment receivable from the Brazil Sale Transaction.