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Fair Value Measurements

3 Months Ended

Mar. 31, 2024

The fair value hierarchy established by ASC 820, Fair Value Measurement, prioritizes the use of inputs used in valuation techniques into the following three levels:

•Level 1 inputs are observable quoted prices in active markets for identical assets or liabilities

•Level 2 inputs are observable, either directly or indirectly, but are not Level 1 inputs

•Level 3 inputs are unobservable

The following fair value hierarchy table presents the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023:


	As of March 31, 2024								As of December 31, 2023
	Fair Value Hierarchy								Fair Value Hierarchy
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents(a)	$	358,304	$	—	$	—	$	358,304	$	380,564	$	—	$	—	$	380,564
Restricted cash(a)	14,749		—		—		14,749		14,116		—		—		14,116
Restricted investments(b)	—		130,499		—		130,499		—		130,287		—		130,287
Investments in lieu of retention(c)	28,342		87,614		—		115,956		19,988		86,961		—		106,949
Total	$	401,395	$	218,113	$	—	$	619,508	$	414,668	$	217,248	$	—	$	631,916

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(a)Includes money market funds and short-term investments with maturity dates of three months or less when acquired.

(b)Restricted investments, as of March 31, 2024 and December 31, 2023, consist of available-for-sale (“AFS”) debt securities, which are valued based on pricing models determined from a compilation of primarily observable market information, broker quotes in non-active markets or similar assets; therefore, they are classified as Level 2 assets.

(c)Investments in lieu of retention are included in retention receivable as of March 31, 2024 and December 31, 2023, and are composed of money market funds of $28.3 million and $20.0 million, respectively, and AFS debt securities of $87.6 million and $87.0 million, respectively. The fair values of the money market funds are measured using quoted market prices; therefore, they are classified as Level 1 assets. The fair values of AFS debt securities are determined from a compilation of primarily observable market information, broker quotes in non-active markets or similar assets; therefore, they are classified as Level 2 assets.

Investments in AFS debt securities consisted of the following as of March 31, 2024 and December 31, 2023:


	As of March 31, 2024								As of December 31, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Restricted investments:
Corporate debt securities	$	101,568	$	395	$	(2,257)	$	99,706	$	95,903	$	762	$	(2,202)	$	94,463
U.S. government agency securities	24,380		4		(1,050)		23,334		29,082		18		(1,054)		28,046
Municipal bonds	7,899		4		(908)		6,995		8,227		5		(914)		7,318
Corporate certificates of deposit	495		—		(31)		464		498		—		(38)		460
Total restricted investments	134,342		403		(4,246)		130,499		133,710		785		(4,208)		130,287

Investments in lieu of retention:
Corporate debt securities	88,134		105		(1,682)		86,557		87,601		246		(1,950)		85,897
Municipal bonds	824		233		—		1,057		823		241		—		1,064
Total investments in lieu of retention	88,958		338		(1,682)		87,614		88,424		487		(1,950)		86,961

Total AFS debt securities	$	223,300	$	741	$	(5,928)	$	218,113	$	222,134	$	1,272	$	(6,158)	$	217,248

The following table summarizes the fair value and gross unrealized losses aggregated by category and the length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2024 and December 31, 2023:


	As of March 31, 2024
	Less than 12 Months				12 Months or Greater				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Restricted investments:
Corporate debt securities	$	22,242	$	(123)	$	37,507	$	(2,134)	$	59,749	$	(2,257)
U.S. government agency securities	3,333		(24)		14,869		(1,026)		18,202		(1,050)
Municipal bonds	—		—		6,814		(908)		6,814		(908)
Corporate certificates of deposit	—		—		465		(31)		465		(31)
Total restricted investments	25,575		(147)		59,655		(4,099)		85,230		(4,246)

Investments in lieu of retention:
Corporate debt securities	24,714		(125)		45,925		(1,557)		70,639		(1,682)
Total investments in lieu of retention	24,714		(125)		45,925		(1,557)		70,639		(1,682)

Total AFS debt securities	$	50,289	$	(272)	$	105,580	$	(5,656)	$	155,869	$	(5,928)


	As of December 31, 2023
	Less than 12 Months				12 Months or Greater				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Restricted investments:
Corporate debt securities	$	4,971	$	(3)	$	40,649	$	(2,199)	$	45,620	$	(2,202)
U.S. government agency securities	1,280		(4)		22,858		(1,050)		24,138		(1,054)
Municipal bonds	99		(2)		7,038		(912)		7,137		(914)
Corporate certificates of deposit	—		—		460		(38)		460		(38)
Total restricted investments	6,350		(9)		71,005		(4,199)		77,355		(4,208)

Investments in lieu of retention:
Corporate debt securities	11,398		(55)		49,726		(1,895)		61,124		(1,950)
Total investments in lieu of retention	11,398		(55)		49,726		(1,895)		61,124		(1,950)

Total AFS debt securities	$	17,748	$	(64)	$	120,731	$	(6,094)	$	138,479	$	(6,158)

The unrealized losses in AFS debt securities as of March 31, 2024 and December 31, 2023 are primarily attributable to market interest rate increases and not a deterioration in credit quality of the issuers. Management evaluated the unrealized losses in AFS debt securities considering factors including credit ratings and other relevant information, which may indicate that contractual cash flows are not expected to occur. Based on the analysis, management determined that credit losses did not exist for AFS debt securities in an unrealized loss position as of March 31, 2024 and December 31, 2023.

It is not considered likely that the Company will be required to sell the investments before full recovery of the amortized cost basis of the AFS debt securities, which may be at maturity. As a result, consistent with the same period in 2023, the Company has not recognized any impairment losses in earnings during the three months ended March 31, 2024.

The amortized cost and fair value of AFS debt securities by contractual maturity as of March 31, 2024 are summarized in the table below. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations.



(in thousands)	Amortized Cost		Fair Value

Due within one year	$	38,792	$	38,009
Due after one year through five years	174,478		171,095
Due after five years	10,030		9,009
Total	$	223,300	$	218,113

The carrying values of receivables, payables and other amounts arising out of normal contract activities, including retention, which may be settled beyond one year, are estimated to approximate fair value. Of the Company’s long-term debt, the fair value of the 2017 Senior Notes was $495.4 million and $490.9 million as of March 31, 2024 and December 31, 2023, respectively. The fair values of the 2017 Senior Notes were determined using Level 1 inputs, specifically current observable market prices. The fair value of the Term Loan B was $274.4 million and $358.9 million as of March 31, 2024 and December 31, 2023, respectively. The fair values of the Term Loan B were determined using Level 2 inputs, specifically third-party quoted market prices. The reported value of the Company’s remaining borrowings approximates fair value as of March 31, 2024 and December 31, 2023.

- 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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