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Fair Value Measurements
9 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 16 — Fair Value Measurements

Our financial instruments include cash and cash equivalents, receivables, accounts payable and long-term debt. The carrying amount of cash and cash equivalents, trade and other current receivables as well as accounts payable approximates fair value due to the short-term nature of these instruments.

The following table sets forth our assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

Fair Value at September 30, 2022

    

Level 1

    

Level 2

    

Level 3

    

Total

Liabilities:

 

  

 

  

 

  

 

  

Contingent consideration

 

 

 

29,364

 

29,364

Contingent consideration liability related to the Alliance acquisition (Note 3) is measured at fair value using Level 3 unobservable inputs at the end of each reporting period and changes in its estimated fair value are recorded in earnings until the liability is settled. The fair value of the estimated contingent consideration is determined based on our evaluation of the probability and amount of earnout that may be achieved based on expected future performance of Helix Alliance. The Monte Carlo simulation model is used to calculate the estimated earnout payment, which is then discounted to present value based on the expected payment date of the contingent consideration. The weighted-average volatility was 47.5% and the weighted average discount rate was estimated to be 9.2% at September 30, 2022. The changes in the fair value of contingent consideration are as follows:

    

2022

Balance at July 1,

$

26,700

Change in fair value

2,664

Balance at September 30, 

$

29,364

The principal amount and estimated fair value of our long-term debt are as follows (in thousands):

September 30, 2022

December 31, 2021

Principal

Fair

Principal

Fair

    

Amount (1)

    

Value (2)

    

Amount (1)

    

Value (2)

MARAD Debt (matures February 2027)

$

40,913

$

40,496

$

48,850

$

52,481

2022 Notes (matured May 2022)

 

 

 

35,000

 

34,794

2023 Notes (mature September 2023)

 

30,000

 

29,504

 

30,000

 

29,054

2026 Notes (mature February 2026)

 

200,000

 

205,754

 

200,000

 

200,562

Total debt

$

270,913

$

275,754

$

313,850

$

316,891

(1)Principal amount includes current maturities and excludes any related unamortized debt issuance costs. See Note 6 for additional disclosures on our long-term debt.
(2)The estimated fair value of the 2022 Notes, the 2023 Notes and the 2026 Notes was determined using Level 1 fair value inputs under the market approach. The fair value of the MARAD Debt was estimated using Level 2 fair value inputs under the market approach, which was determined using a third-party evaluation of the remaining average life and outstanding principal balance of the indebtedness as compared to other obligations in the marketplace with similar terms.