Fair Value Measurements |
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| Fair Value Measurements | 10. Fair Value Measurements Accounting guidance for fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Recurring Fair Value Measurements The following table presents the reported carrying values and the fair values by level of the Company’s assets and liabilities measured at fair value on a recurring basis:
The following table presents fair value measurements using significant unobservable inputs (Level 3):
Derived Participation Investment The Company has entered into an arrangement with a consumer financing partner to invest in a participation interest in the cash flows of certain financing transactions under the white label financing program with such consumer financing partner (the “Derived Participation Investment”). The fair value of this investment was estimated by discounting the projected cash flows subject to the participation interest. The assumptions in the analysis included loan losses, prepayments, and recoveries derived based on historical observation of such data pertaining to the RV industry, as well as other relevant industries with loan structure similar to that of the RV industry. This is categorized as a Level 3 measurement and there was no significant change in unrealized gains or losses during the six months ended June 30, 2026. In July 2026, the $5.7 million amount listed above as “In transit exchanges for new securities” was reinvested along with an additional $2.0 million in the residual interest of a previously securitized Derived Participation Investment. Additionally, as of June 30, 2026 and December 31, 2025, the Company held a $7.5 million investment in a preferred interest of this consumer financing partner, which operates a captive-as-a-service business specializing in financing for RVs and powersports. Since this investment did not have a readily determinable fair value, it was recorded at its cost less impairments, if any. Contingent Consideration The Company’s contingent consideration liability was established as part of the consideration for the acquisition of a tire rescue roadside assistance business in June 2024. The fair value of this liability was estimated as the present value of the probability weighted milestone payments at each of the first two anniversaries of the date of the acquisition for a maximum aggregate payment of $0.5 million if all milestones are reached. The assumptions in the analysis included the Company’s assessment of the probability that the milestones will be reached and a discount rate based primarily on the Company’s credit risk and its ability to pay. This was categorized as a Level 3 measurement and there was no significant change in unrealized gains or losses during the six months ended June 30, 2025. Based on milestones reached, the first milestone payment was determined to be $0.1 million and was paid in October 2025. The milestones relating to the second milestone payment could not be reached and did not result in any further milestone payments. Other Fair Value Disclosures There have been no transfers of assets or liabilities between the fair value measurement levels and there were no material re-measurements to fair value during 2026 and 2025 of assets and liabilities that are not measured at fair value on a recurring basis. For floor plan notes payable under the Floor Plan Facility, the amounts reported in the accompanying condensed consolidated balance sheets approximate the fair value due to their short-term nature or the existence of variable interest rates that approximate prevailing market rates. The following table presents the reported carrying value and fair value information for the Company’s debt instruments. The fair values shown below for the Term Loan Facility, as applicable, are based on quoted prices in the inactive market for identical assets (Level 2) and the fair values shown below for the Floor Plan Facility, the Real Estate Facilities and the Other Long-Term Debt are estimated by discounting the future contractual cash flows at the current market interest rate that is available based on similar financial instruments.
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