Fair Value Measurement

12 Months Ended

Dec. 31, 2023

ASC 820, Fair Value Measurements and Disclosures, requires that the Company disclose estimated fair values for its financial instruments. The estimated fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for the asset or liability. Fair value estimates are made at a specific point in time and are based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Changes in assumptions could significantly affect these estimates. Because the fair value is estimated as of December 31, 2023 and 2022, the amounts that will actually be realized or paid at settlement or maturity of the instruments in the future could be significantly different.

The estimated fair values of the Company's financial instruments represent management's best estimates of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. The estimated 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 at the measurement date, the estimated fair value measurement reflects management's own judgments about the assumptions that market participants would use in pricing the asset or liability. These judgments are developed by the Company based on the best information available under the circumstances.

The following summary presents a description of the methods and assumptions used to estimate the fair value of each class of financial instrument.

Restricted Investments, Held-to-Maturity — The estimated fair value of the Company's restricted investments is based on quoted prices in active markets that are readily and regularly obtainable. See Note 5 for additional investments disclosures regarding restricted investments, held-to-maturity.

Convertible Notes — The estimated fair value of the Company's convertible note is based on probability weighted discounted cash flow analysis of the corresponding pay-off/redemption.

Equity Method Investments — The estimated fair value of the Company's equity method investments are privately negotiated investments. The carrying amount of these investments approximates the fair value.

Equity Securities — The estimated fair value of the Company's investments in equity securities is based on quoted prices in active markets that are readily and regularly obtainable.

Pension Plan Assets — The estimated fair value of ACT's pension plan assets are based on quoted prices in active markets that are readily and regularly obtainable.

Debt Instruments and Leases — For notes payable under the 2023 Term Loan, the 2021 Revolver, the 2021 Term Loans, the 2021 Prudential Notes, and the revenue equipment installment notes, fair value approximates the carrying value due to the variable interest rate. The carrying value of the 2023 RSA and the 2022 RSA approximates fair value, as the underlying receivables are short-term in nature and only eligible receivables (such as those with high credit ratings) are qualified to secure the borrowed amounts. For finance and operating lease liabilities, the carrying value approximates the fair value, as the Company's finance and operating lease liabilities are structured to amortize in a manner similar to the depreciation of the underlying assets.

Contingent Consideration — The estimated fair value of the Company's contingent consideration owed to sellers is calculated using applicable models and inputs for each acquired entity.

Other — Cash and cash equivalents, restricted cash, net accounts receivable, income tax refund receivable, and accounts payable represent financial instruments for which the carrying amount approximates fair value, as they are short-term in nature. These instruments are accordingly excluded from the disclosures below. All remaining balance sheet amounts excluded from the below are not considered financial instruments, subject to this disclosure.

Fair Value Hierarchy — ASC 820 establishes a framework for measuring fair value in accordance with GAAP and expands financial statement disclosure requirements for fair value measurements. ASC 820 further specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy follows:

•Level 1 — Valuation techniques in which all significant inputs are quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.

•Level 2 — Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices from markets that are not active for assets or liabilities that are identical or similar to the assets or liabilities being measured. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.

•Level 3 — Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following table presents the carrying amounts and estimated fair values of the Company's major categories of financial assets and liabilities:


		December 31, 2023				December 31, 2022
	Consolidated Balance Sheets Caption	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
		(In thousands)
Financial Assets:
Restricted investments, held-to-maturity 1	Restricted investments, held-to-maturity, amortized cost	$	530	$	529	$	7,175	$	7,130
Equity method investments	Other long-term assets	102,252		102,252		103,517		103,517
Investments in equity securities	Other long-term assets	—		—		1,668		1,668
Convertible note	Other long-term assets	—		—		11,341		11,341

Financial Liabilities:
2021 Term Loan A-2, due September 2024 2	Long-term debt – less current portion	199,902		200,000		199,755		200,000
2021 Term Loan A-3, due September 2026 2	Long-term debt – less current portion	799,058		800,000		798,705		800,000
2023 Term Loan, due September 2026 3	Long-term debt – less current portion	249,135		250,000		—		—
2021 Revolver, due September 2026	Revolving line of credit	67,000		67,000		43,000		43,000
Revenue equipment installment notes 4	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	279,339		279,339		—		—
2021 Prudential Notes 5	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	25,078		25,100		35,960		36,014
2022 RSA, due October 2025 6	Accounts receivable securitization – less current portion	—		—		418,561		419,000
2023 RSA, due October 2025 7	Accounts receivable securitization – less current portion	526,508		527,000		—		—
Mandatorily redeemable contingent consideration 8	Accrued liabilities	134,107		134,107		—		—
Contingent consideration 8	Accrued liabilities, Other long-term liabilities	40,859		40,859		4,217		4,217

1Refer to Note 5 for the differences between the carrying amounts and estimated fair values of the Company's restricted investments, held-to-maturity.

2As of December 31, 2023, the carrying amounts of the 2021 Term Loan A-2 and 2021 Term Loan A-3 are net of $0.1 million and $0.9 million in deferred loan costs, respectively. As of December 31, 2022, the carrying amounts of the 2021 Term Loan A-2, and 2021 Term Loan A-3 are net of $0.2 million and $1.3 million in deferred loan costs, respectively.

3As of December 31, 2023, the carrying amount of the 2023 Term Loan was net of $0.9 million in deferred loan costs.

4As of December 31, 2023, the carrying amount of the revenue equipment installment notes included $1.3 million in fair value adjustments.

5As of December 31, 2023, the carrying amount of the 2021 Prudential Notes is net of $22,000 in deferred loan costs and $1.1 million in fair value adjustments. As of December 31, 2022, the carrying amount of the 2021 Prudential Notes is net of $0.1 million in deferred loan costs and $1.7 million in fair value adjustments.

6The carrying amount of the 2022 RSA is net of $0.4 million in deferred loan costs as of December 31, 2022.

7The carrying amount of the 2023 RSA is net of $0.5 million in deferred loan costs as of December 31, 2023.

8Refer to Note 4 for information regarding the contingent consideration related to the U.S. Xpress Acquisition.

Recurring Fair Value Measurements (Assets) — As of December 31, 2023, the Company had no major categories of assets estimated at fair value that were measured on a recurring basis.

The following table depicts the level in the fair value hierarchy of the inputs used to estimate fair value of assets measured on a recurring basis as of December 31, 2022:


		Fair Value Measurements at Reporting Date Using
	Estimated Fair Value	Level 1 Inputs	Level 2 Inputs	Level 3 Inputs	Unrealized Gain (Loss) Position
	(In thousands)



As of December 31, 2022
Convertible notes 1	11,341	—	—	11,341	1,341
Investments in equity securities 2	1,668	1,668	—	—	(50,918)

1Convertible notes — The consolidated statements of comprehensive income include the fair value activities from the Company's convertible notes within "Other income (expenses), net". The estimated fair value is based on probability-weighted discounted cash flow analysis of the corresponding pay-off/redemption. During 2022, the Company recognized $1.2 million of unrealized gains associated with the $10.0 million face value convertible note, discussed above.

2Investments in equity securities — The consolidated statements of comprehensive income include the fair value activities from the Company's investments in equity securities within "Other (expenses) income, net". The estimated fair value is based on quoted prices in active markets that are readily and regularly obtainable. During 2022, the Company recognized a loss of $52.6 million from its investments in equity securities, which consisted of $64.0 million in unrealized losses. This was partially offset by $11.4 million in realized gains from its other equity investments.

Recurring Fair Value Measurements (Liabilities) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate the fair value of liabilities measured on a recurring basis as of December 31, 2023 and 2022.


			Fair Value Measurements at Reporting Date Using
	Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Gain (Loss)
	(In thousands)
As of December 31, 2023
Mandatorily redeemable contingent consideration 1	$	134,107	$	—	$	—	$	134,107	$	—
Contingent consideration 1 2	$	40,859	$	—	$	—	$	40,859	$	3,359
As of December 31, 2022
Contingent consideration 2	4,217		—		—		4,217		—

1Refer to Note 4 for information regarding the contingent consideration related to the U.S. Xpress Acquisition.

2Contingent consideration is associated with acquisitions and investments. The Company recognized a gain of $3.4 million during 2023. The Company did not recognize any gains (losses) during 2022 related to the revaluation of these liabilities.

Nonrecurring Fair Value Measurements (Assets) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate the fair value of assets measured on a nonrecurring basis as of December 31, 2023 and 2022:


			Fair Value Measurements at Reporting Date Using
	Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Loss
	(In thousands)
As of December 31, 2023
Buildings 1	$	—	$	—	$	—	$	—	$	(187)

Equipment 2	$	—	$	—	$	—	$	—	$	(469)
Software 3	—		—		—		—		(1,580)
As of December 31, 2022
Buildings 1	$	—	$	—	$	—	$	—	$	(810)

1 Reflects the non-cash impairment of building improvements (within the Truckload segment and the All Other Segments).

2 Reflects the non-cash impairment of certain revenue equipment held for sale (within the Truckload segment).

3 Reflects the non-cash impairment of software (within the All Other Segments).

Nonrecurring Fair Value Measurements (Liabilities) — As of December 31, 2023 and 2022, there were no liabilities included in the Company's consolidated balance sheets at estimated fair value that were measured on a nonrecurring basis.

Fair Value of Pension Plan Assets — The following table sets forth the level within the fair value hierarchy of ACT's pension plan financial assets accounted for at fair value on a recurring basis. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. ACT's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of these assets and their placement within the fair value hierarchy levels.


			Fair Value Measurements at Reporting Date Using:
	Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(In thousands)
As of December 31, 2023


Fixed income funds	34,536		34,536		—		—
Cash and cash equivalents	887		887		—		—
Total pension plan assets	$	35,423	$	35,423	$	—	$	—

As of December 31, 2022
US equity funds	$	10,901	$	10,901	$	—	$	—
International equity funds	4,828		4,828		—		—
Fixed income funds	34,728		34,728		—		—
Cash and cash equivalents	2,078		2,078		—		—
Total pension plan assets	$	52,535	$	52,535	$	—	$	—

- 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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