Forafric Global PLC

Company Overview

Business Model: Forafric Global PLC is an integrated, global business engaged in the purchase, storage, transport, processing, and sale of agricultural commodities and commodity products. The Company's primary products include flour, semolina, pasta, and couscous. It sells processed commodity products to wholesale food manufacturers and distributors in approximately forty-five countries across Europe, Asia, Africa, and the Middle East. As of December 31, 2024, the Company operates nine milling plants in Morocco with a total processing capacity of 3,700 tons per day and an annual milling capacity of 1,100,000 tons. Additionally, it operates two mills in Mali and Burkina Faso with an extra capacity of 500 tons per day and owns PRODELA, an animal feed processing company in Morocco that commercializes bran from its mills.

Market Position: Forafric Global PLC is a leader in the Moroccan wheat milling business, with a milling capacity of 3,700 tons per day as of December 31, 2024, up from 3,000 tons per day in 2023. The Company's total raw material volume of 633,752 tons per year as of December 31, 2024, provides significant bargaining power. Its main brands in Morocco are MayMouna, popular with households, and Tria, favored by industrial clients. As of December 31, 2024, Tria holds approximately 15% of the overall couscous market in Morocco, 28% of the packaged couscous market, and 9% of the overall pasta market. The acquisition of Société Industrielle de Minoterie du Sud (SIMS) in July 2023 expanded the Company's market share in Morocco to a target of 20%, establishing it as a leader in the Marrakesh Region. Morocco's total wheat production in 2024 was 5 million metric tons of wheat and 0.9 million metric tons of durum, with per capita wheat-based product consumption being the second highest globally at 200kg per year.

Recent Strategic Developments:

• June 9, 2022: Completed a Business Combination, resulting in Forafric Global PLC's Ordinary Shares and Warrants commencing trading on the Nasdaq Stock Market LLC.
• July 26, 2023: Acquired 90% of Société Industrielle de Minoterie du Sud (SIMS), a soft wheat milling company in Marrakesh, Morocco, for approximately $56 thousand in cash and noncontrolling interest, and the assumption of approximately $5.3 million in outstanding debt.
• April 5, 2024: Its subsidiary, Epidor, signed a 10-year lease agreement with HMMA Group to rent a mill in Meknes, Morocco, with annual rental fees starting at $692,308 for the first five years.
• November 2024: Initiated a plan to divest non-core assets, including all long-term assets of a durum wheat mill in Casablanca (240 tons per day capacity) and a wholly owned subsidiary operating in logistics activities (Finalog).
• February 2025: Announced a new balance sheet strengthening strategy focused on Morocco and soft wheat, supported by the divestment of non-core assets.
• January 2025 (Subsequent Event): Entered into agreements for the sale of the durum wheat mill assets for $19.0 million and the logistics subsidiary for $10.0 million, with closings expected by May 31, 2025.

Geographic Footprint: Forafric Global PLC's corporate headquarters are in Gibraltar, with substantially all operations conducted through its subsidiaries. Its primary operational and sales base is in Morocco, where it has nine milling plants, one secondary processing unit, two logistics platforms, and 300,000 tons of grain storage facilities. The Company also operates two mills in Mali and Burkina Faso and has a greenfield project in Angola. Its products are exported to 45 countries across Europe, Asia, Africa, and the Middle East.

Cross-Border Operations: The Company is incorporated in Gibraltar and operates through its fully owned subsidiary, Forafric Agro Holdings Limited (FAHL), also incorporated in Gibraltar, and its various operating subsidiaries. It sources raw materials internationally from Europe, South America, the Black Sea region, and Canada. The Moroccan Dirham, its primary functional currency for revenues and expenses, is pegged to the U.S. dollar and Euro. The Company is exposed to currency fluctuations, particularly with the Angolan Kwanza and the Euro. It is subject to multi-jurisdictional regulatory frameworks, including specific import and food safety certifications (ONSSA) in Morocco. Millcorp Geneve SA, a related party, supplies 100% of the Company's imported grain under an agreement extended through March 2026.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin (2024): 9.97%
• Operating Margin (2024): -2.83%
• Net Margin (2024): -8.52%

Investment in Growth:

• R&D Expenditure: Not explicitly stated.
• Capital Expenditures: $1,776 thousand in 2024, compared to $9,485 thousand in 2023.
• Strategic Investments:
  • Acquisition of 90% of SIMS in 2023 for approximately $56 thousand in cash and noncontrolling interest, plus assumption of $5.3 million in debt.
  • Long-term lease agreement for a mill in Meknes, Morocco, signed in April 2024, with annual rental fees starting at $692,308.
  • Agreements for the sale of a durum wheat mill's long-term assets for $19.0 million and a logistics subsidiary for $10.0 million, expected to close by May 31, 2025.

Currency Impact Analysis:

• The Company's equity is funded in U.S. dollars, while the majority of revenues and expenses are incurred in Moroccan Dirhams, which is pegged to the U.S. dollar and Euros.
• Foreign exchange loss was $33 thousand in 2024, compared to a gain of $(212) thousand in 2023.
• The Company uses foreign currency forward contracts to manage foreign exchange rate fluctuations, recording a gain of $116 thousand on these contracts in 2024.
• Functional currency of operating subsidiaries is generally the local currency, with translation adjustments recorded in Accumulated other comprehensive loss.

Business Segment Analysis

Soft Wheat

Financial Performance:

• Revenue: $215,090 thousand (-1.7% YoY)
• Operating Margin: -0.56%
• Key Growth Drivers: The decrease in 2024 revenue was primarily due to a decrease in crushed volume. In 2023, revenue growth was driven by an increase in sales volume, capacity extension in two Moroccan regions, and the acquisition of SIMS.

Product Portfolio:

• Major product lines include soft wheat flour, used for bread, pastries, desserts, and sauces.
• Key brands are MayMouna (e.g., Pastry flour, Extra white, The Baker, Finette) and other brands such as AMBRE, BRIO, LAMSAMDA, and TARGA. All soft wheat flours are enriched with iron and vitamins.

Market Dynamics:

• The Company is a leader in the Moroccan wheat milling market.
• The Moroccan market is highly regulated, with restrictions on soft wheat imports and government subsidies for flour, which are expected to change.
• Local Moroccan wheat quality is generally not high enough for industrial use, necessitating imports.

Geographic Revenue Distribution:

• Morocco: Primary market.
• Western Africa: Operations in Mali and Burkina Faso are dedicated to soft wheat crushing.

Durum Wheat

Financial Performance:

• Revenue: $27,418 thousand (-43.2% YoY)
• Operating Margin: -7.28%
• Key Growth Drivers: The significant decrease in 2024 revenue was primarily due to the planned asset disposal of one of the Company's semolina crushing facilities. In 2023, revenue increased due to higher sales volume.

Product Portfolio:

• Major product lines include hard wheat flour and semolina, primarily used for pasta and couscous.
• Key brands include MayMouna (e.g., Whole meal Flour, Finot, Fine semolina, Course semolina) and other brands such as LES GRANDES SEMOULERIES DU MAROC and SANABIL.

Market Dynamics:

• Durum wheat is a traditional staple in Morocco and other Mediterranean countries, mainly used for breadmaking and couscous.
• The Company has classified a durum wheat mill in Casablanca with a capacity of 240 tons per day as held for sale, aligning with its new strategy to focus on soft wheat.

Geographic Revenue Distribution:

• Morocco: Primary market.

Couscous and Pasta

Financial Performance:

• Revenue: $27,021 thousand (-14.0% YoY)
• Operating Margin: -5.97%
• Key Growth Drivers: The decrease in 2024 revenue was primarily due to a decrease in volume sold. In 2023, revenue increased due to higher sales volume.

Product Portfolio:

• Major product lines include couscous and pasta.
• Key brands are Tria (e.g., TRIA DAKIK MINE NAWH MOUMTAZ, TRIA COUSCOUS DE QUALITE SUPERIEURE, TRIA PATES DE QUALITE SUPERIEURE) and other brands such as SABA, LA BELLA, ZERDA, and BRIO.

Market Dynamics:

• Tria holds approximately 15% of the overall couscous market, 28% of the packaged couscous market, and 9% of the overall pasta market in Morocco.
• The Company anticipates continued market growth driven by demographic increases and urbanization in Africa, leading to increased demand for processed products.

Geographic Revenue Distribution:

• Morocco: Primary market.
• Europe: BRIO brand is used for export to Europe.

International Operations & Geographic Analysis

Revenue by Geography:

International Business Structure:

• Subsidiaries: Forafric Global PLC operates through its wholly owned subsidiary, Forafric Agro Holdings Limited (FAHL), a Gibraltar private company. Key operating subsidiaries include Forafric Maroc, MDS Mali, MDS Burkina Faso, Sanabil SA, and PRODELA. Finalog, a logistics subsidiary, is classified as held for sale.
• Joint Ventures: Not explicitly stated.
• Licensing Agreements: Not explicitly stated.

Cross-Border Trade:

• Export Markets: Products are exported to 45 countries across Europe, Asia, Africa, and the Middle East.
• Import Dependencies: The Company imports raw materials, primarily wheat, from Europe, South America, the Black Sea region, and Canada. Millcorp Geneve SA, a related party, currently provides 100% of the Company's imported grain.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: In 2022, 1,179,722 ordinary shares were repurchased and cancelled in full satisfaction of Forward Purchase Agreements.
• Dividend Payments: The Company has not declared any dividends in the past and does not expect to pay cash dividends in the foreseeable future, as it intends to retain available funds and future earnings to fund business development and growth.
• Future Capital Return Commitments: No specific future capital return commitments are disclosed.

Balance Sheet Position:

• Cash and Equivalents: $12,231 thousand as of December 31, 2024, a decrease from $23,998 thousand as of December 31, 2023.
• Total Debt: $165,970 thousand as of December 31, 2024, compared to $198,657 thousand as of December 31, 2023. This includes working capital lines of credit, wheat inventory lines of credit, current and long-term portions of term loans, and loans from related parties.
• Net Cash Position: The Company had a net debt position of $(153,739) thousand as of December 31, 2024.
• Debt Maturity Profile: The scheduled maturities for outstanding long-term debt (excluding lines of credit and related party loans) are $4,634 thousand in 2025, $2,968 thousand in 2026, $2,426 thousand in 2027, $1,554 thousand in 2028, $1,476 thousand in 2029, and $4,693 thousand thereafter, totaling $17,751 thousand.
• In December 2024, the Company received a demand letter for immediate repayment of $42,000 thousand in loan facilities due to a shortfall in pledged inventory collateral, which has been classified as current liabilities.

Cash Flow Generation:

• Operating Cash Flow: $23,466 thousand in 2024, compared to $33,326 thousand in 2023.
• Free Cash Flow: Approximately $21,690 thousand in 2024 (Operating Cash Flow less Capital Expenditures).

Currency Management:

• The Company's equity is funded in U.S. dollars, while the majority of its revenues and expenses are in Moroccan Dirhams, which is pegged to the U.S. dollar and Euros.
• Primary foreign currency exposures include the Moroccan Dirham, U.S. Dollar, and Euro, with additional exposure to the Angolan Kwanza.
• The Company utilizes foreign currency forward contracts to mitigate foreign exchange rate fluctuations. As of December 31, 2024, it had 8 such contracts outstanding with a notional value of $8,540 thousand and €2,020 thousand ($2,098 thousand), all expiring by December 31, 2025.

Operational Excellence

Production & Service Model: Forafric Global PLC operates an integrated business model encompassing the purchase, storage, transport, processing, and sale of agricultural commodities. Its core activities involve the production and sale of wheat flours, semolina, pasta, and couscous. The Company's production process emphasizes quality and nutrition, starting with rigorous testing of raw materials for protein, heavy metals, and pesticide residues. This is followed by multi-stage cleaning, grinding to separate bran and flour, and comprehensive evaluation of finished products for grain size, protein, humidity, color, and breadmaking qualities, along with sanitary analyses. Products are then packaged in suitable food packaging. The Company also operates PRODELA, an animal feed processing company, to commercialize bran by-products.

Global Supply Chain Architecture: Key Suppliers & Partners:

• Raw Material Supplier: Millcorp Geneve SA, a wholly owned subsidiary of Lighthouse Capital Limited (the Seller), is a critical supplier, providing 100% of the Company's imported grain. The supply agreement, requiring at least 80% of annual cereal requirements from Millcorp, was extended through March 31, 2026.
• Trading Companies: Forafric and Cerelis, both based in Morocco, are dedicated to sourcing raw materials for the group.

Facility Network:

• Manufacturing: The Company operates 9 milling plants in Morocco (7 for common wheat, 2 for durum wheat) with a total processing capacity of 3,700 tons per day. It also has 2 mills in Mali and Burkina Faso with an additional capacity of 500 tons per day, and 1 secondary processing unit in Morocco for pasta and couscous.
• Research & Development: While not explicitly detailed as R&D centers, the Company emphasizes "milling know-how" and continuous product reinvention to meet changing consumer needs and maintain high quality standards.
• Distribution: The Company possesses 2 logistics platforms and 300,000 tons of grain storage facilities in Morocco. Its Finalog subsidiary in Casablanca features a multimodal platform (Road/Rail) linked to the port, with a daily reception capacity of 7,000 tons and delivery capacity of 3,000 tons. (Note: Finalog is classified as held for sale).

Operational Metrics:

• Total milling capacity: 4,200 metric tons per day (3,700 in Morocco, 500 in Mali/Burkina Faso).
• Annual milling capacity (Morocco): 1,100,000 tons per year.
• Raw material volume: 633,752 tons per year as of December 31, 2024.
• Raw material cost: Accounts for almost 90% of total cost.
• Crushing cost target: Below $30 USD per ton produced.
• Bran production: Represents 20% to 25% of finished product output.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: The Company primarily sells to wholesale food manufacturers and distributors.
• Digital Platforms: Not explicitly stated.

Customer Portfolio: Enterprise Customers:

• Tria is the Company's most popular brand for industrial clients in Morocco.
• Customer Concentration: Not explicitly stated, but the Company serves a diverse customer base across 45 countries.

Regional Market Penetration:

• Morocco: The Company is a market leader in wheat milling, having achieved a target of 20% market share in Morocco with the acquisition of SIMS. Its Tria brand holds significant market shares in couscous (15% overall, 28% packaged) and pasta (9% overall).
• Growth Markets: The Company identifies Sub-Saharan Africa and Angola as fast-growing markets, driven by projected demographic growth (African population to reach 2.5 billion by 2050) and increasing urbanization (1.5 billion by 2050), which is expected to boost demand for processed food products.
• Products are exported to 45 countries in Europe, Asia, Africa, and the Middle East.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: The Company operates in the large and growing African food market, providing staple products like flour, semolina, pasta, and couscous. This market is expected to grow significantly due to projected demographic increases (African population from 1.5 billion in 2025 to 2.5 billion by 2050) and rapid urbanization (1.5 billion by 2050). Wheat is a critical global commodity due to its unique dough-forming properties and health benefits (fiber, vitamins, minerals), driving increased demand for wheat flour. The Moroccan market, where the Company has a significant presence, is characterized by high per capita wheat consumption (200kg/year) and a changing sector that relies on substantial wheat imports despite governmental efforts to support local production. The flour milling market in Morocco is imbalanced, with supply capacity often exceeding demand, leading to price competition.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Moulins du Maghreb
• Zine Cereales
• Rica Maroc
• Casagrains
• Dari Couspate
• IZDA (a group with common purchasing interest)
• Gromic
• Fandy

Regional Competitive Dynamics: The Moroccan flour milling market is highly price-competitive, with numerous competitors, some of whom are larger and possess greater financial resources. The market experiences supply and demand imbalances, forcing the Company to compete on price and potentially reduce margins to maintain market share. The competitive landscape is subject to expansion by other regional or international agribusinesses.

Risk Assessment Framework

Strategic & Market Risks

Global Market Dynamics:

• Agricultural Commodity Price Fluctuations: The international price of wheat, which constitutes almost 90% of total costs, is the main risk, influenced by weather, supply/demand, and strategies of major producers (North America, Central Europe, Black Sea). Price increases directly impact margins.
• Supply and Demand Imbalances: The Moroccan flour market is imbalanced, with supply capacity often exceeding demand, leading to price competition and reduced margins.
• Global Economic Downturns: Significant downturns or recessions in major regions could reduce demand for agricultural commodities, adversely affecting business and results.
• Climate Change/Weather Conditions: Severe adverse weather or global warming effects can cause crop failures, reduced harvests, and disruptions in transportation, impacting supply, pricing, and operational costs. Climate change could also lead to lower yields in Morocco and other semi-arid regions.
• Customer Retention & Acquisition: Future growth depends on retaining existing customers, attracting new ones, and increasing purchase volumes, requiring substantial financial and resource investments.
• Acquisition & Joint Venture Integration: The Company may not realize anticipated benefits from acquisitions or joint ventures, facing unanticipated delays, costs, and management diversion.

Operational & Execution Risks

Global Supply Chain Vulnerabilities:

• Supplier Dependency: The Company is highly dependent on Millcorp Geneve SA, a related party, for 100% of its imported grain. Any disruption to Millcorp's operations or inability to fulfill supply obligations could adversely affect operating results.
• Raw Material Quality: Dependence on obtaining high-quality wheat; inability to do so necessitates costly enhancers, negatively impacting results.
• Regional Disruptions: Natural disasters, economic downturns, civil unrest, or political instability in Morocco, where most facilities and customers are located, could severely impact operations.
• Transportation & Logistics: Significant increases in shipping and freight costs could materially affect financial condition and results.
• IT System Failures & Cybersecurity: The business relies on IT systems, and failures, cyberattacks, or data breaches could disrupt operations, lead to liability, reputational damage, and delay product commercialization. The Company currently lacks written policies and procedures for IT security.

Financial & Regulatory Risks

Currency & Financial Risks:

• Foreign Exchange: Exposure to currency exchange rate fluctuations, particularly the Angolan Kwanza and the Euro, can adversely affect revenues and expenses denominated in local currencies.
• Capital Intensive Business: Requires significant capital for operations and expansion, with working capital needs directly affected by agricultural commodity prices. Inability to secure financing could limit growth.
• Going Concern: The Company has incurred significant operating losses and its cash flow projections indicate insufficient liquidity for the next twelve months, raising substantial doubt about its ability to continue as a going concern.
• Debt Repayment: A demand letter for immediate repayment of $42,000 thousand in loan facilities was received in December 2024 due to a shortfall in pledged inventory collateral.

Regulatory & Compliance Risks:

• Multi-Jurisdictional Compliance: Operations in a highly regulated environment with evolving legal frameworks, including food and feed safety, environmental, health, and safety laws.
• Trade Regulations: Moroccan government policies significantly affect the agricultural industry, including soft wheat import restrictions, flour subsidies (expected to disappear), and ONSSA certification requirements.
• Legal & Regulatory Actions: Risk of legal claims, government investigations, or regulatory enforcement actions due to non-compliance, potentially leading to civil/criminal penalties and reputational damage.
• Public Company Requirements: Compliance with SEC and Nasdaq requirements strains resources and management attention.
• Foreign Private Issuer Status: Exemptions from certain U.S. domestic public company provisions mean shareholders may receive less or different information.
• Controlled Company Status: As a "controlled company" by Lighthouse Settlement, the Company may rely on Nasdaq corporate governance exemptions, potentially affording shareholders less protection.

Geopolitical & External Risks

Country-Specific Risks:

• Political & Economic Risk: Exposure to volatile international economic, political, and market conditions, particularly in emerging markets, including changes in laws, sovereign risk, exchange controls, civil unrest, and government intervention.
• Ukraine War Impact: The ongoing war in Ukraine has reduced soft wheat availability by 35% since February 2022, increasing raw material prices.

Innovation & Technology Leadership

Research & Development Focus:

• Innovation Pipeline: Forafric Global PLC emphasizes innovation, particularly with its MayMouna brand, which is recognized for introducing new products and adapting to changing consumer needs. The Company continuously reinvents its products to support evolving culinary traditions and consumer preferences.

Intellectual Property Portfolio:

• Trademark Strategy: The Company's material intellectual property consists of approximately 25 trademarks and logos associated with its main brands, MayMouna and Tria, and other products. These trademarks are registered in Morocco and are valid for 10 years from filing, renewable for additional 10-year periods.

Technology Partnerships: Not explicitly stated.

Leadership & Governance

Executive Leadership Team

International Management Structure: The executive leadership team includes members based in Morocco (Julien Benitah, Mustapha Ghazali, Oury Marciano), Gibraltar (Franco Cassar, James Lasry, Rachel Bitan), and the United States (Paul Packer, Ira Greenstein), reflecting the Company's international operations.

Board Composition: The Board of Directors consists of seven members. Franco Cassar, Ira Greenstein, and Rachel Bitan are designated as independent directors. The Audit Committee is chaired by Franco Cassar (who qualifies as an audit committee financial expert) and includes Ira Greenstein and Rachel Bitan. The Remuneration Committee is chaired by Rachel Bitan and includes Franco Cassar and Ira Greenstein. The Nominating and Corporate Governance Committee is chaired by James Lasry and includes Franco Cassar, Ira Greenstein, and Rachel Bitan. The Board's diversity includes 1 female and 6 male directors. The Company qualifies as a "controlled company" under Nasdaq rules, as Lighthouse Settlement controls approximately 71.62% of the outstanding Ordinary Shares. While it currently complies with Nasdaq listing standards without relying on the "controlled company" exemption, it may choose to utilize these exemptions in the future.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: Primary Regulatory Environments:

• Morocco: The Company's operations in Morocco are highly regulated. Key regulations include restrictions on soft wheat imports (only permitted before end of April and from September/October, depending on local harvests, to protect local producers), government subsidies for flour (a mechanism expected to disappear soon), and mandatory ONSSA (National Office for Food Safety in Morocco) certification for all imported soft wheat. Corporate income tax rates in Morocco are 20% for net tax income below MAD 100 million and 35% for income at or above MAD 100 million, with the Company's Moroccan entities progressively moving to the 20% rate.
• Mali: Companies are subject to an income tax rate of 30%.
• Burkina Faso: Companies are subject to an income tax rate of 27.5%.
• Environmental & Health/Safety: The Company is subject to various environmental protection and occupational health and safety laws in its operating countries, requiring numerous permits and compliance with regulations on emissions, waste disposal, land use, and water use.

Cross-Border Compliance:

• Export Controls: Not explicitly stated.
• Sanctions Compliance: Not explicitly stated.
• Anti-Corruption: The Company's business management strategy includes a commitment to the prevention of corruption and other illegal conduct.

International Tax Strategy:

• Transfer Pricing: Not explicitly stated.
• Tax Treaties: There is no comprehensive income tax treaty between the U.S. and Gibraltar.
• BEPS Compliance: Not explicitly stated.
• U.S. Federal Income Tax (Section 7874): The Company, incorporated in Gibraltar, is not expected to be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code, as the percentage of Globis stockholders in the Company after the Business Combination is anticipated to be less than 80%. Consequently, limitations on the use of U.S. tax attributes are not expected to apply, as the relevant percentage should be less than 60%.

Environmental & Social Impact

Global Sustainability Strategy: Forafric Global PLC's business management strategy is anchored on sustainable growth, aiming to be a benchmark business group committed to social well-being, diversity, environmental balance, and social and economic progress. This commitment extends to tax responsibility, respect for human rights, and the prevention of corruption. The Company integrates environmental, social, and ethical criteria into its decision-making processes, alongside economic variables, to generate value for all stakeholders.

Environmental Commitments:

• Climate Strategy: The Company is dedicated to reducing its carbon footprint through power consumption reduction. It acknowledges that climate change, including temperature increases and rainfall changes, could lead to lower yields in Morocco and other semi-arid Mediterranean countries, potentially impacting raw material costs and availability.
• Regional Sustainability Initiatives: The Company's operations are subject to various environmental protection laws and regulations in its operating countries, requiring ongoing compliance and capital expenditures.

Social Impact by Region:

• Community Investment: The Company supports the social and economic well-being of its growers, suppliers, and local communities.
• Labor Standards: As of December 31, 2024, the Company has approximately 600 employees across 4 countries, none of whom are represented by labor unions. It maintains good employee relations and is dedicated to creating incentive programs for welfare, development, and personal growth.

Currency Management & Financial Strategy

Multi-Currency Operations: Currency Exposure:

Hedging Strategies:

• Transaction Hedging: The Company actively participates in foreign exchange markets and has entered into foreign currency forward contracts to reduce the risk from foreign exchange rate fluctuations. As of December 31, 2024, it had 8 such contracts outstanding with a notional value of $8,540 thousand and €2,020 thousand ($2,098 thousand), all expiring by December 31, 2025. A gain of $116 thousand on these contracts was recorded in 2024.
• Translation Hedging: Foreign currency translation adjustments arising from the translation of operating subsidiaries' financial statements (whose functional currency is generally the local currency) into the U.S. dollar reporting currency are recorded as Accumulated other comprehensive loss.