Item 7A. Quantitative and Qualitative Disclosures about Market Risk

In the operation of our business, we have various exposures to areas of risk related to factors within and outside the control of management. Significant areas of risk and our strategies to manage the exposure are discussed below.

Foreign Currency Risk

We face transactional exchange rate risk from the purchase and sale of goods and services in currencies other than our functional currency or the functional currency of an applicable subsidiary. As such, our operating results could be affected by changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we sell our products, purchase goods or otherwise incur costs to operate foreign subsidiaries. As a percentage of the Company’s total Net sales, the net sales of foreign operations, for which transactions are primarily in local currencies were 7% in 2025, 8% in 2024 and 8% in 2023, with the Canadian, UK, and Brazilian operations representing approximately 33%, 24%, and 19%, respectively, of 2025 total international Net sales. To manage this exposure, we closely monitor the working capital requirements of our international units and we may enter into forward foreign exchange contracts to mitigate risk related to receipts from customers and payments to suppliers.

Additionally, we are subject to foreign exchange translation risk due to changes in the value of foreign currencies in relation to our reporting currency, the U.S. Dollar. The translation risk is primarily concentrated in the exchange rate between the U.S. Dollar and the Brazilian Real, British Pound and Canadian Dollar. As the U.S. Dollar strengthens against these currencies on which we transact business, revenue and income will generally be negatively impacted, and if the U.S. Dollar weakens, revenue and income will generally be positively impacted. Accordingly, we estimate a hypothetical 10% movement of the U.S. Dollar against the various foreign exchanges rate we translate from, in aggregate would impact operating profit by approximately $6.7 million.

Interest Rate Risk

Our financial results are subject to interest rate fluctuations to the extent there is a difference between the amount of our interest-earning assets and the amount of interest-bearing liabilities. The principal objectives of our investment management activities are to preserve capital while earning net investment income that is commensurate with acceptable levels of interest rate, default and liquidity risk, taking into account our funding needs. As part of our investment management strategy, we may use derivative financial products such as interest rate hedges and interest rate swaps.

From time to time or when required, we issue commercial paper, which exposes us to changes in interest rates. Our cash position includes amounts denominated in foreign currencies. We manage our worldwide cash requirements by considering available funds held by our subsidiaries and the cost effectiveness with which these funds can be accessed.

As of December 31, 2025, the long-term debt outstanding related to the fixed-rate senior notes was $1,450.0 million. The senior notes are not exposed to interest rate risk as the bonds are at a fixed-rate until maturity.

As of December 31, 2025 the Company had $600.0 million outstanding from the Term Loan Agreement, and the interest rate is variable based on the adjusted term SOFR rate. As of December 31, 2025 the Company also had $289.1 million of short-term debt, primarily commercial paper that was floating rate debt. A 100 basis point rise or decline in interest rates would not be significant to our financial condition or results of operations.

The following table presents cost and weighted average interest rate information related to financial instruments that are sensitive to changes in interest rates, by maturity at December 31, 2025 (dollars in millions):

We use derivative financial instruments only if they are matched with a specific asset, liability, or proposed future transaction. We do not speculate or use leverage when trading a financial derivative product.