Derivative Instruments

3 Months Ended

Mar. 31, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

We use derivatives as part of the normal business operations to manage our exposure to fluctuations in foreign currency rates on USD denominated debt held by subsidiaries with a functional currency other than USD and fluctuations in foreign currency translation associated with our global business presence.

Net Investment Hedges

In November 2022, we entered into a fixed-to-fixed cross-currency rate swap contract between the Euro and U.S. dollar to protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates

and that we designated as a hedge and accounted for as a net investment hedge (the “November 2022 Swap”). At the spot exchange rate of 1.0205, we converted notional amounts of approximately $80.0 million at 5.84% for €78.4 million at 3.95%. In May 2024, we entered into a fixed-for-fixed cross currency swap in a transaction commonly referred to as a “blend-and-extend,” whereby the November 2022 Swap was effectively terminated and voluntarily de-designated, and the modified swap (the “May 2024 Swap”) converted notional amounts of $80.0 million at 5.84% for €78.4 million at 4.54%. The May 2024 swap is designated as a hedge and accounted for as a net investment hedge.

On January 15, 2025, we entered into a variable-for-variable cross currency swap contract between the Euro and U.S. Dollar to protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates, with notional amounts of approximately $80.0 million and €77.9 million, respectively, and that we designated as a hedge and accounted for as a net investment hedge (the “January 2025 Swap”). The January 2025 swap is settled monthly at floating rates based on SOFR plus 4.5% and EURIBOR plus 4.69%, respectively, on the first of every month. The January 2025 swap is designated as a hedge and accounted for as a net investment hedge.

The component of the gains and losses on our net investment in these designated foreign operations driven by changes in foreign exchange rates are economically partly offset by movements in the fair value of our cross-currency swap contracts. The fair value of the swaps is calculated each period, with changes in fair value recorded in currency translation in other comprehensive income (loss) and accumulated other comprehensive income (loss). Components of the May 2024 Swap and the January 2025 Swap excluded from the assessment of effectiveness are amortized out of accumulated other comprehensive income (loss) and into interest expense over the life of these swaps to maturity on June 1, 2025 and February 1, 2028, respectively.

Fair Value Hedge

On January 24, 2025, we entered into a variable-to-variable cross-currency swap contract to reduce the effects of changes in foreign currency from Euro to U.S. Dollar on the portion of the term loan held by the Dutch Borrower. The cross-currency swap contract has notional amounts of $50.0 million and €47.8 million. The swap is settled monthly at floating rates based on SOFR plus 4.5% and EURIBOR plus 4.69%, respectively. We apply fair value hedge accounting and we consider market factors other than the change in the spot exchange rate on the notional amount of the swap to be excluded components.

The foreign currency gains and losses on the portion of the term loan held by the Dutch Borrower are driven by changes in foreign exchange rates and are economically partly offset by movements in the fair value of our cross-currency swap contracts. Fair value of the swap is calculated each period, with the impact of changes in foreign currency spot rates on the cross-currency swap notional amount reported in foreign currency (gain)/loss each period, while all other changes are reported in other comprehensive income. The components of the swap that are excluded from the assessment of effectiveness are amortized out of accumulated other comprehensive income (loss) and into interest expense over the life of the swap to maturity on February 1, 2028.

The following table summarizes the total fair values of derivative assets and liabilities and the respective classification in the Unaudited Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024. The net amount of derivatives can be reconciled to the tabular disclosure of fair value in Note 10 — Fair Value Measurement:


		Assets (Liabilities)
	Balance Sheet Classification	March 31, 2025		December 31, 2024
Cross-Currency Swaps
Designated as fair value hedge	Accrued liabilities and other	$	(0.7)	$	—
Designated as net investment hedges	Accrued liabilities and other	$	(5.8)	$	—
Designated as fair value hedge	Derivative instruments	$	(1.6)	$	—
Designated as net investment hedges	Derivative instruments	$	(4.5)	$	(1.3)

The following table presents the effect of our derivative financial instruments on our Unaudited Condensed Consolidated Statements of Operations. The income effects of our derivative activities are reflected in interest expense.


	Three Months Ended March 31,
	2025		2024
Interest rate swap designated as cash flow hedge	$	—	$	(2.4)
Cross-currency swaps designated as net investment hedges, amounts excluded from effectiveness testing	$	(0.4)	$	0.4

Income effects of our cross-currency swap designated as a fair value hedge were not significant for the three months ended March 31, 2025.

Ranpak Holdings Corp. 10-Q