Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements A description of the inputs used in the valuation of assets and liabilities is summarized as follows: Level 1 — Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets. Level 2 — Inputs include directly or indirectly observable inputs other than Level 1 inputs such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that are considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves that are observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 — Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities or related observable inputs that can be corroborated at the measurement date. Measurements of non-exchange traded derivative contract assets and liabilities are primarily based on valuation models, discounted cash flow models or other valuation techniques that are believed to be used by market participants. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities. Financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 are summarized in the following tables by type of inputs applicable to the fair value measurements:
The deferred compensation assets are held in mutual funds. The fair value of the deferred compensation assets and liabilities is based on the quoted market prices for the mutual funds and thus represents a Level 1 fair value measurement. On April 17, 2023, the Company entered into an interest rate swap agreement to manage interest rate exposure. For additional information on the interest swap agreement, see "Note 6 – Long-Term Debt". The carrying value of interest rate swap contract is at fair value, which is determined based on current interest rate and forward interest rates as of the balance sheet date and is classified within Level 2. On January 4, 2019, the Company entered into a tax receivable agreement (“TRA”) with its former owners. The fair value of the liability was estimated using a discounted cash flow analysis given that the fair value of the liability is expected to approximate the maximum obligation under the TRA. The assumptions used in preparing the discounted cash flow analyses include estimates of interest rates and the timing and amount of incremental cash flows. Given that the information utilized in determining the obligation was not observable in the market, the measurement of the liability represents a Level 3 fair value measurement. The value of the obligation may decrease in-line with decreases in the Company's estimated taxable income. The Company made $0.3 million of remeasurement adjustments during the three months ended March 31, 2024 and no remeasurement adjustments during the three months ended March 31, 2023. The Company made payments of $10.9 million and $24.8 million under the TRA during the three months ended March 31, 2024 and 2023, respectively. A reconciliation of the beginning and ending balance for the Level 3 measurement are as follows:
(1)Remeasurement adjustments are recognized in selling, general and administrative expense in the consolidated statement of operations. Fair Value of Other Financial Instruments The fair value of the Company's outstanding First Lien Term Loan (as defined in "Note 6 – Long-Term Debt") as of March 31, 2024 and December 31, 2023 is based on the quoted market price for the same or similar issues of debt, which represents a Level 2 fair value measurement, is approximately:
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