Item 7A - Quantitative and Qualitative Disclosures About Market Risk
−Removed: We are exposed to risk that our earnings, cash flows and equity could be adversely impacted by changes in foreign exchange rates, interest rates and commodity prices.
+Added: We are exposed to the risk that our earnings, cash flows and equity could be adversely impacted by changes in foreign exchange rates, interest rates and commodity prices.
We maintain risk management controls and policies to monitor these risks and take appropriate risk mitigation actions.
We use certain derivative instruments, when available on a cost-effective basis, to hedge our underlying economic exposures.
−Removed: For additional information on our financial instruments and hedging strategies, See Note 23 – Derivative Financial Instruments of our consolidated financial statements for the year ended December 31, 2023 included elsewhere in this Form 10-K.
+Added: Refer to Note 23 – Derivative Financial Instruments to our consolidated financial statements included in this Form 10-K for more information on our financial instruments and hedging strategies.
Exchange Rate Risk
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The exchange rates used to translate our foreign subsidiaries’ financial results for the year ended December 31, 2024, compared to the year ended December 31, 2023, reflected, on average, the U.S.
−Removed: dollar strengthened against the Canadian dollar 4% and weakened against the Euro by 3%, respectively.
−Removed: Exchange rates had a nominal impact on our consolidated net revenues and Adjusted EBITDA from continuing operations, respectively, in the year ended December 31, 2023 as compared to an adverse impact of (4%) and of (3%) on our consolidated net revenues and Adjusted EBITDA from continuing operations, respectively, in the year ended December 31, 2022.
+Added: dollar strengthened against the Canadian dollar and the Euro by 9% and 6%, respectively.
+Added: Exchange rates had a nominal impact on our consolidated net revenues and an adverse impact of (1%) on our Adjusted EBITDA from continuing operations in the year ended December 31, 2024, as compared to a nominal impact on our consolidated net revenues and Adjusted EBITDA from continuing operations, respectively, in the year ended December 31, 2023.
We cannot be certain that fluctuations in foreign currency exchange rates, particularly the strengthening of the U.S.
dollar against major currencies, such as the Euro, the Canadian dollar, the British pound, or the currencies of large developing countries, would not materially adversely affect our business, financial condition, and results of operations.
−Removed: We use short-term foreign currency forward contracts to mitigate the impact of foreign exchange fluctuations on consolidated earnings.
−Removed: As of December 31, 2023, we held foreign currency derivative contracts, with a total notional amount of $95.9 million in order to manage the effect of exchange fluctuations on forecasted sales, purchases, acquisitions, capital expenditures and certain intercompany transactions that are denominated in foreign currencies.
−Removed: We have foreign currency derivative contracts, with a total notional amount of $140.1 million, to manage the risks of foreign currency gains and losses on intercompany loans and interest.
−Removed: We also used foreign currency derivative contracts, with a total notional amount of $28.9 million as of December 31, 2023, to mitigate the impact to the consolidated earnings of the Company from the effect of the translation of certain subsidiaries’ local currency results into U.S.
+Added: We use short-term foreign currency derivative contracts that are not designated as hedges to mitigate the impact of foreign exchange fluctuations on consolidated earnings.
+Added: As of December 31, 2024, we held foreign currency derivative contracts, with a total notional amount of $148.4 million to manage the effect of exchange fluctuations on certain intercompany transactions and intercompany loans and interest that are denominated in foreign currencies.
We do not use derivative financial instruments for trading or speculative purposes.
+Added: At the end of 2024, we implemented a hedging program to manage the potential changes in value associated with the amounts payable on raw material purchases that are denominated in foreign currencies to minimize the impact of the changes in foreign currencies.
+Added: We have foreign currency derivative contracts, which qualify as cash flow hedges, with a total notional amount of $163.3 million as of December 31, 2024.
+Added: We record gains and losses for these contracts in other comprehensive (loss) income to the extent that these hedges are effective and until we recognize the underlying transactions in net earnings, at which time we recognize these gains and losses in cost of sales on our consolidated statements of operations.
By using derivative financial instruments to hedge exposures to foreign currency fluctuations, we are exposed to credit risk and market risk.
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The market for our products may or may not accept price increases, and as such, there is no assurance that we can maintain margins in an environment of rising commodity prices.
−Removed: See Item 1A- Risk Factors - Prices and availability of the raw materials we use to manufacture our products are subject to fluctuations and we may be unable to pass along to our customers the effects of any price increases.
+Added: Refer to Item 1A - Risk Factors - Prices and availability of the raw materials we use to manufacture our products are subject to fluctuations and we may be unable to pass along to our customers the effects of any price increases.
We purchase from multiple geographically diverse companies to mitigate the adverse impact of higher prices for our raw materials.
Also, from time to time, we enter into derivatives to hedge commodity price fluctuations that are immaterial to the consolidated financial statements.
−Removed: For more information about our derivative asset and liabilities, refer to Note 23 - Derivative Financial Instruments of our audited consolidated financial statements included in this Form 10-K.
+Added: Refer to Note 23 – Derivative Financial Instruments to our consolidated financial statements included in this Form 10-K for more information about our derivative asset and liabilities.
We also maintain other strategies to mitigate the impact of higher raw material, energy, and commodity costs, which typically offset only a portion of the adverse impact.
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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.