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These risks primarily include interest rate sensitivities.
−Removed: As of September 30, 2024 and December 31, 2023, the outstanding amounts related to our 2020 Credit Facility incur interest fees at variable interest rates and are affected by changes in the general level of market interest rates.
−Removed: However, there was zero outstanding balance on the 2020 Credit Facility as of September 30, 2024 and December 31, 2023.
+Added: As of March 31, 2025 and December 31, 2024, the outstanding amounts related to our 2020 Credit Facility incur interest fees at variable interest rates and are affected by changes in the general level of market interest rates.
+Added: However, there was zero outstanding balance on the 2020 Credit Facility as of March 31, 2025 and December 31, 2024.
Foreign Currency Exchange Risk
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Our objective in managing exposure to foreign currency fluctuations is to reduce the volatility caused by foreign exchange rate changes on the earnings, cash flows and financial position of our international operations.
−Removed: We generally target to hedge a majority of our forecasted yearly foreign currency exchange exposure through a 24-month
−Removed: rolling layered approach and leave a portion of our currency forecast floating at spot rate.
+Added: We generally target to hedge a majority of our forecasted yearly foreign currency exchange exposure through a 24-month rolling layered approach and leave a portion of our currency forecast floating at spot rate.
Our currency forecast and hedge positions are reviewed quarterly.
The gains and losses on the forward contracts associated with our balance sheet positions are recorded in ‘‘Other income (expense), net” in the condensed consolidated statements of operations appearing elsewhere in this Quarterly Report on Form 10-Q.
−Removed: The total notional values of our forward exchange contracts were $99.4 million and $121.0 million as of September 30, 2024 and December 31, 2023, respectively.
−Removed: The derivatives on the forward exchange contracts resulted in an unrealized loss of $(5.9) million for the nine months ended September 30, 2024, and we estimate that a 10% strengthening or weakening of the U.S.
+Added: The total notional values of our forward exchange contracts were $121.0 million and $107.4 million as of March 31, 2025 and December 31, 2024, respectively.
+Added: The derivatives on the forward exchange contracts resulted in an unrealized gain of $2.8 million for the three months ended March 31, 2025, and we estimate that a 10% strengthening or weakening of the U.S.
dollar would have resulted in an approximately $3.5 million gain or loss.
A portion of our cash and cash equivalents are denominated in foreign currencies.
−Removed: As of September 30, 2024, a 1% change in the value of the U.S.
−Removed: dollar compared to foreign currencies would have caused our cash and cash equivalents to decrease or increase by $0.1 million.
−Removed: As of December 31, 2023, a 1% change in the value of the U.S.
+Added: As of March 31, 2025, a 1% change in the value of the U.S.
dollar compared to foreign currencies would have caused our cash and cash equivalents to decrease or increase by $0.1 million.
−Removed: Inflation Risk
+Added: Tariff and Inflation Risks
Inflation generally affects us by increasing our cost of transportation, labor and manufacturing costs.
In recent years, we have seen fluctuating transportation costs caused by global supply chain disruptions or geopolitical instability and general inflation effects, which may cause pressure on our costs and margins.
−Removed: More specifically, we source a large amount of our finished goods from international countries, which exposes us to international supply chain inflation, particularly ocean freight.
−Removed: In the nine months ended September 30, 2024, general inflationary pressures continue to increase the other elements of our cost of goods and operating expenses.
+Added: More specifically, we source a large amount of our finished goods from international countries, which exposes us to international supply chain inflation, particularly ocean freight, and to changes in the strength of the U.S.
+Added: In the three months ended March 31, 2025, general inflationary pressures continue to increase the other elements of our cost of goods and operating expenses.
+Added: During the first
+Added: quarter of 2025, various tariffs were announced on imports into the U.S.
+Added: On April 2, 2025, the U.S.
+Added: announced a new universal baseline tariff of 10%, plus significant additional country-specific tariffs for select trading partners, on all U.S.
+Added: The reciprocal country-specific tariffs were subsequently paused for 90 days on most countries.
+Added: The imposition of the baseline 10% tariff will increase our costs of goods sold.
+Added: The uncertainty of future tariffs could also cause disturbances in ocean shipping capacity that could effect our ability to secure ocean freight containers for our products, and create inflationary effects on our costs, in addition to the direct impact of tariffs.
We are exposed to concentration of credit risk from our major customers.
−Removed: In the nine months ended September 30, 2024, sales to two customers represented approximately 48% of our consolidated net sales.
+Added: In the three months ended March 31, 2025, sales to two customers represented approximately 45% of our consolidated net sales.
We have not experienced credit issues with these customers.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.