Fair Value Measurements

6 Months Ended

Jun. 30, 2024

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, derivative instruments and long-term debt. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are representative of their respective Level 1 fair values due to the short-term maturity of these instruments.

The Company’s ABL Facility applies floating interest rates to outstanding amounts; therefore, the carrying amount of the ABL Facility approximates its Level 3 fair value. The fair value of the 2029 Senior Notes is determined using Level 2 inputs, relying on quoted prices in less active markets.

The Company records derivative instruments at fair value using Level 2 inputs of the fair value hierarchy. The interest rate swaps are valued using a discounted cash flow analysis based on available market data on the expected cash flows of each derivative using observable inputs, including interest rate curves and credit spreads. See Note 11 (“Derivative Instruments”) for more details.

The contingent consideration liability from a prior year acquisition is measured at fair value each reporting period, using Level 3 unobservable inputs (such as probability assessments of future cash flows), and changes in estimates of fair value are recognized in earnings.

The following table summarizes the fair value of the Company’s interest rate swaps, contingent consideration and 2029 Senior Notes (in thousands):


	Carrying Value		As of June 30, 2024
			Level 1		Level 2		Level 3		Total
Interest rate swap- current	$	5,590	$	—	$	5,590	$	—	$	5,590
Interest rate swap- non-current	31,153		—		31,153		—		31,153
Contingent consideration	3,673		—		—		3,673		3,673
2029 Senior Notes(1)	750,000		—		769,133		—		769,133


	Carrying Value		As of December 31, 2023
			Level 1		Level 2		Level 3		Total
Interest rate swap- current	$	8,194	$	—	$	8,194	$	—	$	8,194
Interest rate swap- non-current	14,256		—		14,256		—		14,256
Contingent consideration	3,673		—		—		3,673		3,673

(1) Carrying value and fair value exclude the deduction for the unamortized debt issuance costs, see Note 10 (“Debt and Credit Facilities”) for details.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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