Fair Value Measurements and Financial Instruments |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements and Financial Instruments | Fair Value Measurements and Financial Instruments The fair values of the Company’s assets and liabilities represent the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction on the reporting date. These fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability on the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. The Company discloses the fair values of its assets and liabilities according to the quality of valuation inputs under the following hierarchy: •Level 1 Inputs: Quoted prices (unadjusted) in an active market for identical assets or liabilities. •Level 2 Inputs: Inputs other than quoted prices that are directly or indirectly observable. •Level 3 Inputs: Unobservable inputs that are significant to the fair value of assets or liabilities. The classification of an asset or liability is based on the lowest level of input significant to its fair value. Those that are initially classified as Level 3 are subsequently reported as Level 2 when the fair value derived from unobservable inputs is inconsequential to the overall fair value, or if corroborating market data becomes available. Assets and liabilities that are initially reported as Level 2 are subsequently reported as Level 3 if corroborating market data is no longer available. Transfers occur at the end of the reporting period. There were no transfers into or out of Levels 1, 2, and 3 during the six months ended June 30, 2024 and 2023. The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, notes receivable, investments in equity securities, accounts payable, accrued liabilities, long-term debt, and finance and operating lease obligations. These financial instruments do not require disclosure by level. The carrying values of all of the Company’s financial instruments included in the accompanying unaudited condensed consolidated balance sheets approximated or equaled their fair values on June 30, 2024 and December 31, 2023. •The carrying values of cash and cash equivalents, accounts receivable, and accounts payable (including accrued liabilities) approximated fair value on June 30, 2024 and December 31, 2023, due to their short-term nature. •The carrying value of investments in equity securities were measured at fair value on June 30, 2024 based on quoted prices in active markets. •The carrying value of amounts outstanding under long-term debt agreements with variable rates approximated fair value on June 30, 2024 and December 31, 2023, as the effective interest rates approximated market rates. •The carrying values of amounts outstanding under finance and operating lease obligations approximated fair value on June 30, 2024 and December 31, 2023, as the effective borrowing rates approximated market rates. Nonrecurring Measurements Certain assets and liabilities are measured at fair value on a nonrecurring basis. These items are not measured at fair value on an ongoing basis but may be subject to fair value adjustments in certain circumstances. As of June 30, 2024, the Company recorded $1.2 million of land and $2.8 million of buildings, net of accumulated depreciation, of two properties that met the held for sale criteria, to assets held for sale at a total fair value of $3.4 million, which are included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheets. The Company estimated the fair value of the properties based on the listed selling price for the two properties, which is a Level 3 input. The Company estimates that the carrying value of the assets is equal to the fair value less the estimated costs to sell, net of write-downs taken in the prior period, and therefore no gain or loss was recorded during the six months ended June 30, 2024. As of December 31, 2023, the Company recorded $0.7 million of land and $0.8 million of buildings, net of accumulated depreciation, of one property that met the held for sale criteria, to assets held for sale at a total fair value of $0.8 million, which are included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheets. The Company estimated the fair value of the property based on a communicated selling price for one property, which is a Level 3 input. Recurring Measurements The fair values of the Company’s cash equivalents measured on a recurring basis pursuant to ASC 820-10 Fair Value Measurements and Disclosures are carried at estimated fair value. Cash equivalents consist of money market accounts which the Company has classified as Level 1 given the active market for these accounts. As of June 30, 2024 and December 31, 2023, the Company had cash equivalents, measured at fair value, of $0.3 million. The Company holds an investment in Oklo Inc. (“Oklo”) made during the three months ended September 30, 2023. In May 2024, Oklo was acquired by a publicly traded special purpose acquisition company which resulted in the conversion of the Company’s investment into common shares of Oklo, which are traded on the New York Stock Exchange. The Company measures this investment in equity securities at fair value using Level 1 inputs based on quoted prices in an active market. As of June 30, 2024, the fair value of the investment was estimated at $17.4 million. The change in Oklo’s fair value resulted in an unrealized gain of $7.4 million during the three and six months ended June 30, 2024, included as a component of other expense, net in the accompanying unaudited condensed consolidated statements of operations. Additionally, during the three months ended December 31, 2023, the Company purchased depository interests representing shares of common stock in Tamboran Resources Corporation (“Tamboran”). In June 2024, Tamboran executed an Initial Public Offering (“IPO”) and listed its common stock on the New York Stock Exchange. In addition to the prior purchase of depository interests, the Company participated in Tamboran’s IPO by purchasing an additional $10.0 million of Tamboran’s common stock. The Company measures this investment in equity securities at fair value using Level 1 inputs based on quoted prices in an active market. As of June 30, 2024, the fair value of the investment was estimated at $20.1 million. The change in Tamboran’s fair value resulted in an unrealized loss of $0.2 million during the three and six months ended June 30, 2024, included as a component of other expense, net in the accompanying unaudited condensed consolidated statements of operations. Nonfinancial assets The Company estimates fair value to perform impairment tests as required on long-lived assets. The inputs used to determine such fair value are primarily based upon internally developed cash flow models and would generally be classified within Level 3 in the event that such assets were required to be measured and recorded at fair value within the accompanying unaudited condensed consolidated financial statements. No such measurements were required as of June 30, 2024 and December 31, 2023 as no triggering event was identified. Credit Risk The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents, and trade receivables. The Company’s cash and cash equivalent balances on deposit with financial institutions total $30.0 million and $36.8 million as of June 30, 2024 and December 31, 2023, respectively, which exceeded FDIC insured limits. The Company regularly monitors these institutions’ financial condition. The majority of the Company’s customers have payment terms of 45 days or less. As of June 30, 2024 and December 31, 2023, no customers accounted for more than 10% of total consolidated accounts receivable and unbilled revenue. During the three and six months ended June 30, 2024, customer A accounted for 12% and 14% of consolidated revenues, respectively. During the three and six months ended June 30, 2023, customer B accounted for 11% of consolidated revenues. No other customers accounted for more than 10% of revenues during the respective periods. The Company mitigates the associated credit risk by performing credit evaluations and monitoring the payment patterns of its customers. The Company applies historic loss factors to its receivable portfolio segments that are not expected to be further impacted by current economic developments, and an additional economic conditions factor to portfolio segments anticipated to experience greater losses in the current economic environment. While the Company has not experienced significant credit losses in the past and has not seen material changes to the payment patterns of its customers, the Company cannot predict with any certainty the degree to which unforeseen events may affect the ability of its customers to timely pay receivables when due. Accordingly, in future periods, the Company may revise its estimates of expected credit losses. As of June 30, 2024 and December 31, 2023, the Company had $0.9 million in allowance for credit losses as follows:
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