v3.26.1
FINANCIAL INSTRUMENTS AND DERIVATIVES
 6 Months Ended
Jun. 30, 2026
FINANCIAL INSTRUMENTS AND DERIVATIVES  
FINANCIAL INSTRUMENTS AND DERIVATIVES

NOTE 11—FINANCIAL INSTRUMENTS AND DERIVATIVES

The Company’s ongoing business operations expose it to various risks, including fluctuating foreign exchange rates, interest rate risk, and commodity price risk, in particular natural gas. To manage these risks, when possible, the Company periodically enters into derivative financial instruments, such as foreign exchange forward contracts, interest rate swap agreements, and commodity swap agreements, forward contracts, or options. The Company does not hold or enter into financial instruments for trading or speculative purposes. All derivatives are recorded on the condensed consolidated balance sheets at fair value.

Foreign Exchange Forward Contracts

Certain subsidiaries have assets and liabilities denominated in currencies other than their respective functional currencies, which creates foreign exchange risk. The Company’s principal strategy in managing its exposure to changes in foreign currency exchange rates is to naturally hedge the foreign currency-denominated liabilities on its balance sheet against corresponding assets of the same currency, such that any changes in liabilities due to fluctuations in exchange rates are offset by changes in their corresponding foreign currency assets. In order to further reduce this exposure, when possible, the Company also uses foreign exchange forward contracts to economically hedge the impact of the variability in exchange rates on assets and liabilities denominated in certain foreign currencies. These derivative contracts are not designated for hedge accounting treatment and as a result, any mark-to-market fluctuations are recognized currently at each reporting date within loss before income taxes.

As of June 30, 2026, the Company had no open foreign exchange forward contracts.

Commodity Cash Flow Hedges & Commodity Economic Hedges

The Company purchases certain commodities, primarily natural gas, to operate facilities and generate heat and steam for various manufacturing processes, which purchases are subject to price volatility. In order to manage the risk of price fluctuations associated with these commodity purchases, as deemed appropriate, the Company may enter into commodity swaps, forward contracts, or options.

From time to time, the Company uses commodity swap agreements, which effectively convert a portion of its natural gas costs into a fixed rate obligation. These commodity derivatives are designated as cash flow hedges, and the contracts are marked-to-market at each reporting date, and any unrealized gains or losses are included in AOCI, to the extent effective, and reclassified to cost of sales in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur. The Company had no open commodity cash flow hedges as of June 30, 2026.

The Company may also enter into certain commodity swap agreements to economically hedge the impact of these price fluctuations, which are not designated for hedge accounting treatment. There were no open commodity economic hedges as of June 30, 2026.

Summary of Derivative Instruments

The following table presents the effect of the Company’s derivative instruments, including those not designated for hedge accounting treatment, on the condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Location and Amount of Gain (Loss) Recognized in
 Statements of Operations

​

​

Three Months Ended

​

Three Months Ended

​

​

June 30, 2026

​

June 30, 2025

​

  ​

Cost of
sales

​

Other (expense) income, net

​

Cost of
sales

​

Other (expense) income, net

Total amount of income and (expense) line items presented in the statements of operations in which the effects of derivative instruments are recorded

​

$

(745.7)

​

$

(5.5)

​

$

(747.7)

​

$

(0.2)

​

​

​

​

​

​

​

​

​

​

​

​

​

The effects of cash flow hedge instruments:

​

​

​

​

​

​

​

​

​

​

​

​

Commodity cash flow hedges

​

​

​

​

​

​

​

​

​

​

​

​

Amount of loss reclassified from AOCI into income

​

$

—

​

$

—

​

$

(0.8)

​

$

—

​

​

​

​

​

​

​

​

​

​

​

​

​

The effects of derivatives not designated as hedge instruments:

​

​

​

​

​

​

​

​

​

​

​

​

Foreign exchange forward contracts

​

​

​

​

​

​

​

​

​

​

​

​

Amount of gain (loss) recognized in income

​

$

—

​

$

—

​

$

—

​

$

(20.0)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Location and Amount of Gain (Loss) Recognized in
 Statements of Operations

​

​

Six Months Ended

​

Six Months Ended

​

​

June 30, 2026

​

June 30, 2025

​

  ​

Cost of
sales

​

Other (expense) income, net

​

Cost of
sales

​

Other (expense) income, net

Total amount of income and (expense) line items presented in the statements of operations in which the effects of derivative instruments are recorded

​

$

(1,408.7)

​

$

(9.7)

​

$

(1,468.7)

​

$

23.0

​

​

​

​

​

​

​

​

​

​

​

​

​

The effects of cash flow hedge instruments:

​

​

​

​

​

​

​

​

​

​

​

​

Commodity cash flow hedges

​

​

​

​

​

​

​

​

​

​

​

​

Amount of loss reclassified from AOCI into income

​

$

—

​

$

—

​

$

(1.1)

​

$

—

​

​

​

​

​

​

​

​

​

​

​

​

​

The effects of derivatives not designated as hedge instruments:

​

​

​

​

​

​

​

​

​

​

​

​

Foreign exchange forward contracts

​

​

​

​

​

​

​

​

​

​

​

​

Amount of gain (loss) recognized in income

​

$

—

​

$

0.3

​

$

—

​

$

(30.0)

Commodity economic hedges

​

​

​

​

​

​

​

​

​

​

​

​

Amount of loss recognized in income

​

$

—

​

$

—

​

$

(1.9)

​

$

—

​

The following table presents the effect of cash flow hedge accounting on AOCI for the three and six months ended June 30, 2026 and 2025:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gain (Loss) Recognized in AOCI on Balance Sheet

​

Gain (Loss) Recognized in AOCI on Balance Sheet

​

​

Three Months Ended

​

Six Months Ended

​

​

June 30, 

​

June 30, 

​

​

2026

  ​ ​ ​

2025

  ​ ​ ​

2026

  ​ ​ ​

2025

Designated as Cash Flow Hedges

​

​

​

​

​

​

​

​

​

​

​

​

Commodity cash flow hedges

​

$

—

​

$

(0.6)

​

$

—

​

$

(0.6)

Total

​

$

—

​

$

(0.6)

​

$

—

​

$

(0.6)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gain (Loss) Recognized in Other income, net in Statement of Operations

​

Gain (Loss) Recognized in Other income, net in Statement of Operations

​

​

Three Months Ended

​

Six Months Ended

​

​

June 30, 

​

June 30, 

​

  ​ ​ ​

2026

  ​ ​ ​

2025

  ​ ​ ​

2026

  ​ ​ ​

2025

Settlements and changes in the fair value of forward contracts (not designated as hedges)

  ​ ​ ​

$

—

  ​ ​ ​

$

(20.0)

​

$

0.3

  ​ ​ ​

$

(30.0)

Remeasurement of foreign currency-denominated assets and liabilities

​

​

0.5

​

​

20.8

​

​

(5.4)

​

​

28.8

Total

​

$

0.5

​

$

0.8

​

$

(5.1)

​

$

(1.2)

​

The Company does not expect to reclassify any net loss from AOCI into earnings in the next twelve months as the Company has no outstanding commodity cash flow hedges as of June 30, 2026.

The following table summarizes the gross and net unrealized gains and losses, as well as the balance sheet classification, of outstanding derivatives recorded in the condensed consolidated balance sheet as of December 31, 2025:

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

​

Foreign

​

​

​

​

​

​

​

Exchange

​

Commodity

​

​

​

​

​

Forward

​

Cash Flow

​

​

Balance Sheet Classification

  ​ ​ ​

Contracts

​

Hedges

​

Total

Liability Derivatives:

​

​

​

​

​

​

​

​

​

Accounts payable

​

$

(1.6)

​

$

(0.1)

​

$

(1.7)

Net derivative liability position

​

$

(1.6)

​

$

(0.1)

​

$

(1.7)

Total net derivative position

​

$

(1.6)

​

$

(0.1)

​

$

(1.7)

​

Forward contracts, interest rate swaps, commodity forward contracts, swaps, or options, and cross currency swaps are entered into with a limited number of counterparties, each of which allows for net settlement of all contracts through a single payment in a single currency in the event of a default on or termination of any one contract. As such, in accordance with the Company’s accounting policy, these derivative instruments are recorded on a net basis by counterparty within the condensed consolidated balance sheets.

Refer to Notes 12 and 17 of the condensed consolidated financial statements for further information regarding the fair value of the Company’s derivative instruments and the related changes in AOCI.