Employee benefit plan

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Employee benefit plan

Employee benefit plan

In accordance with labor law regulations in Mexico, certain employees are legally entitled to receive severance that is commensurate with the tenure they had with us at the time of termination. Our pension obligation is a Level 3 financial instrument that is recorded at fair value and calculated using actuarial valuations by applying the “projected unit credit method.” The fair value as of December 31, 2023 and 2022 was determined based on the application of certain assumptions including a discount rate, mortality (using the EMSSAH-09 and EMSSAM-09 mortality tables), salary increase and estimated personnel turnover and disability.

The following table sets forth our pension obligation, funded status and accumulated pension obligation as of December 31, 2023 and 2022 ($ in thousands):

	As of December 31,
	2023		2022
Change in pension obligation
Balance at beginning of period	$	7,777	$	5,990
Service cost	1,161		857
Interest cost	819		517
Actuarial loss	43		379
Effect of foreign exchange rates	1,213		431
Benefits paid	(1,033)		(397)
Balance at end of period	$	9,980	$	7,777
Underfunded status	(9,980)		(7,777)
Accumulated pension obligation	$	(7,483)	$	(5,486)

There were no plan assets as of December 31, 2023 or 2022 as contributions are made only to the extent benefits are paid. The underfunded status of the plan is recorded in other liabilities in the Consolidated Balance Sheets. Actuarial gains and losses are recognized in the Consolidated Statements of Operations.

The following table presents the components of net periodic pension cost for the years ended December 31, 2023, 2022, and 2021 ($ in thousands):

	Year Ended December 31,
	2023		2022		2021
Service cost	$	1,161	$	857	$	832
Interest cost	819		517		423
Effect of foreign exchange rates	1,213		431		(194)
Compensation-non-retirement post-employment benefits	183		237		694
Settlement and curtailment gain	(62)		(82)		(406)
Other	18		1		3
Total net periodic pension cost	$	3,332	$	1,961	$	1,352

The service cost component of net periodic pension cost is recorded within direct expense in the Consolidated Statements of Operations, while all other components are recorded within other (expense) income.

The weighted-average assumptions used to determine the pension obligation as of December 31, 2023 and 2022 and the net periodic pension cost for the years ended December 31, 2023, 2022, and 2021 were as follows:

	As of December 31,
	2023		2022		2021
Discount rate	9.70	%	9.22	%	8.00	%
Rate of compensation increase	4.79	%	4.79	%	4.79	%

The discount rate reflects the current rate at which our pension obligations could be effectively settled on the measurement date. The discount rate was determined by our actuary based on a yield curve constructed from a portfolio of zero-coupon government

bonds for which the timing and amount of cash flows approximate the estimated benefit payments of the plan. The plan’s expected cash flows are then discounted using the applicable spot rate from the yield curve to determine a single effective discount rate.

The following table represents our expected plan payments for the next five years and thereafter ($ in thousands):

	As of December 31, 2023
2024	$	1,256
2025	1,353
2026	1,446
2027	1,535
2028	1,638
Thereafter	7,479
Total expected plan payments	$	14,707