Company: SBH
Filing Date: 2025-02-13
Form Type: 10-Q
Source: 0000950170-25-019869
Chunk: 54

Company: Sally Beauty Holdings, Inc.
Filing Date: 2025-02-13
Form: 10-Q
Item: Part I, Item 8
Chunk 54
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 forwards, which expire ratably through September 30, 2025, with a notional amount, based upon exchange rates at December 31, 2024, as follows (in thousands): 

        Notional Currency
         
        Notional Amount

        Mexican Peso
         
        $
        16,106

        Canadian Dollar

        8,475

        Euro

        4,705

        Total
         
        $
        29,286

       The changes in fair value related to these foreign currency forwards are recorded quarterly into AOCL. As the forwards are exercised, the realized value is recognized into cost of goods sold (“COGS”), based on inventory turns, in our condensed consolidated statements of earnings. For the three months ended December 31, 2024 and 2023, we recognized a loss of $0.2 million and a loss of $1.4 million, respectively. Based on December 31, 2024, valuations and exchange rates, we expect to reclassify gains of approximately $1.7 million out of AOCL and into COGS over the next 12 months.    Interest Rate SwapIn April 2023, we entered into a three-year interest rate swap with an initial notional amount of $200 million (the “interest rate swap”) to mitigate the exposure to higher interest rates in connection with our Term Loan B due in 2030. The interest rate swap involves fixed monthly payments at the contract rate of 3.705%, and in return, we will receive a floating interest payment based on the 1-month Adjusted Term SOFR Rate. The interest rate swap will mature in April 2026 and is designated as a cash flow hedge. Changes in the fair value of the interest rate swap are recorded quarterly, net of income tax, and included in AOCL. For the three months ended December 31, 2024, we recognized income of $0.5 million and $0.8 million, respectively, into interest expense on our condensed consolidated statements of earnings related to the interest rate swap.  At December 31, 2024, we expect to reclassify gains of approximately $0.8 million out of AOCL and into interest expense over the next 12 months.Non-Designated Derivative InstrumentsWe also use foreign exchange contracts to mitigate our exposure to exchange rate changes in connection with certain intercompany balances not permanently invested. At December 31, 2024, we held forwards, which