Derivative Instruments

9 Months Ended

Apr. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company manages exposure to interest rates and foreign currency movements by entering into derivative contracts from time to time, as movements in such markets could impact the Company’s financial results.

The changes in estimated fair values of derivative instruments result from changes in interest rates and foreign currency exchange rates. Such changes serve to offset exposure in related business assets or liabilities. The Company is exposed to credit loss in the event of nonperformance by a counterparty. Certain of the Company’s derivative instruments are subject to master netting agreements. In certain circumstances, this agreement allows the Company to net-settle amounts payable or receivable related to multiple derivative transactions with the same counterparty. The fair values of derivative instruments are presented on a gross basis, even when the derivative instruments are subject to master netting arrangements. Collateral is generally not required of the Company or of the counterparties to the master netting agreements, and no cash collateral was received or pledged under such agreements as of April 30, 2024 or July 31, 2023. The Company does not enter into derivative instruments for

trading or speculative purposes. The Company does not apply hedge accounting treatment to derivative instruments.

On January 4, 2023, the Company entered into an interest rate swap that partially mitigates the risk to the Company due to potential future Term SOFR movements by trading floating rate payments for fixed rate payments on an applicable notional amount of outstanding variable rate debt. Effective September 30, 2022, the Company amended its interest rate swap initially entered into in March 2020, which expired on March 23, 2023, to transition from a London Interbank Offered Rate based floating rate to a Term SOFR based floating rate.

As of April 30, 2024, the Company held the following interest rate swap agreement, which fixed the interest rate on the applicable notional amount of outstanding variable rate debt:

Notional amount

(in thousands)

Interest rate

Effective date

Expiration date

$100,000

3.735%

January 4, 2023

November 4, 2027

The total notional amounts of the Company’s derivative instruments outstanding are as follows:


(in thousands)	April 30, 2024		July 31, 2023

Interest rate swap contract	$	100,000	$	100,000
Foreign currency forward contracts	—		5,610
Total derivative instruments not designated as hedging instruments	$	100,000	$	105,610

The Company manages annual barrel purchases by engaging domestic and foreign cooperages to provide specified barrel quantities on agreed delivery dates. A significant portion of these invoices are paid in Euros. In order to reduce the foreign exchange risk associated with the Euro to U.S. Dollar conversion rate, the Company enters into foreign currency forward contracts, generally aligning settlement dates with expected barrel deliveries and the anticipated timing of payments to various coopers. See Note 12 (Commitments and contingencies) for additional information related to the Company’s barrel purchase commitments.

Results of period derivative activity

The estimated fair value and classification of derivative instruments on the Condensed Consolidated Statements of Financial Position for April 30, 2024 were as follows:


	Derivative Assets			Derivative Liabilities
(in thousands)	Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value
Interest rate swap contract	Other assets	$	2,902	Other liabilities	$	—
Foreign currency forward contract	Prepaid expenses and other current assets	—		Other current liabilities	—
Total derivatives not designated as hedging instruments		$	2,902		$	—

The estimated fair value and classification of derivative instruments on the Condensed Consolidated Statements of Financial Position for July 31, 2023 were as follows:


	Derivative Assets			Derivative Liabilities
(in thousands)	Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value
Interest rate swap contract	Other assets	$	1,117	Other liabilities	$	—
Foreign currency forward contracts	Prepaid expenses and other current assets	69		Other current liabilities	—
Total derivatives not designated as hedging instruments		$	1,186		$	—

The amounts and classification of the gains and losses in the Condensed Consolidated Statements of Operations related to derivative instruments not designated as hedging instruments are as follows:


		Three months ended April 30,				Nine months ended April 30,
(in thousands)	Classification	2024		2023		2024		2023
Interest rate swap contract	Other (income) expense, net	$	(2,975)	$	900	$	(1,786)	$	3,273
Foreign currency forward contracts	Other (income) expense, net	—		(18)		69		(330)
Total (gain) loss		$	(2,975)	$	882	$	(1,717)	$	2,943