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FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2024

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Schedule components of cash and cash equivalents, short term investments, and restricted funds


		March 31			December 31
		2024			2023

		(in thousands)
Cash and cash equivalents
Cash deposits⁽¹⁾		$	140,655		$	168,472
Money market funds⁽²⁾			32,200			93,754
Total cash and cash equivalents		$	172,855		$	262,226

Short-term investments
Certificates of deposit⁽¹⁾		$	68,065		$	67,842

(1)	Recorded at cost plus accrued interest, which approximates fair value.

(2)	Recorded at fair value as determined by quoted market prices (see amounts presented in the table of financial assets and liabilities measured at fair value within this Note).

Schedule of fair value and carrying value disclosures of financial instruments


		March 31						December 31
		2024						2023

		(in thousands)
			Carrying			Fair			Carrying			Fair
			Value			Value			Value			Value
Credit Facility⁽¹⁾		$	50,000		$	50,000		$	50,000		$	50,000
Notes payable⁽²⁾			162,171			159,385			178,938			177,149
New England Pension Fund withdrawal liability⁽³⁾			19,222			17,734			19,402			18,220
		$	231,393		$	227,119		$	248,340		$	245,369

(1)	The revolving credit facility (the “Credit Facility”) carries a variable interest rate based on Secured Overnight Financing Rate (“SOFR”), plus a margin, priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy).

(2)	Fair value of the notes payable was determined using a present value income approach based on quoted interest rates from lending institutions with which the Company would enter into similar transactions (Level 2 of the fair value hierarchy).

(3)

ABF Freight’s multiemployer pension plan obligation with the New England Teamsters and Trucking Industry Pension Fund (the “New England Pension Fund”) was restructured under a transition agreement effective on August 1, 2018, which resulted in a related withdrawal liability. The fair value of the outstanding withdrawal liability is equal to the present value of the future withdrawal liability payments, discounted at an interest rate of 5.6% and 5.3% at March 31, 2024 and December 31, 2023, respectively, determined using the 20-year U.S. Treasury rate plus a spread (Level 2 of the fair value hierarchy). As of March 31, 2024, the outstanding withdrawal liability totaled $19.2 million, of which $0.7 million was recorded in accrued expenses, and the remaining portion was recorded in other long-term liabilities.

Schedule of financial assets and liabilities measured at fair value on a recurring basis

March 31, 2024

Fair Value Measurements Using

Quoted Prices

Significant

Significant

In Active

Observable

Unobservable

Markets

Inputs

Inputs

Total

(Level 1)

(Level 2)

(Level 3)

(in thousands)

Assets:

Money market funds⁽¹⁾

$

32,200

$

32,200

$

—

$

—

Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan⁽²⁾

4,821

4,821

—

—

Interest rate swap⁽³⁾

1,214

—

1,214

—

$

38,235

$

37,021

$

1,214

$

—

Liabilities:

Contingent consideration⁽⁴⁾

$

100,220

$

—

$

—

$

100,220


		December 31, 2023
					Fair Value Measurements Using
					Quoted Prices			Significant			Significant
					In Active			Observable			Unobservable
					Markets			Inputs			Inputs
		Total			(Level 1)			(Level 2)			(Level 3)

		(in thousands)
Assets:
Money market funds⁽¹⁾		$	93,754		$	93,754		$	—		$	—
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan⁽²⁾			4,627			4,627			—			—
Interest rate swap⁽³⁾			1,710			—			1,710			—
		$	100,091		$	98,381		$	1,710		$	—
Liabilities:
Contingent consideration⁽⁴⁾		$	92,900		$	—		$	—		$	92,900

(1)	Included in cash and cash equivalents.

(2)

Nonqualified deferred compensation plan investments consist of U.S. and international equity mutual funds, government and corporate bond mutual funds, and money market funds which are held in a trust with a third-party brokerage firm. Included in other long-term assets, with a corresponding liability reported within other long-term liabilities.

(3)

Included in other long-term assets. The fair value of the interest rate swap was determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty, which are generally considered to be in Level 3 of the fair value hierarchy. However, the Company assessed Level 3 inputs as insignificant to the valuation at March 31, 2024 and December 31, 2023 and considers the interest rate swap valuation in Level 2 of the fair value hierarchy.

(4)

Included as a long-term liability, based on the March 31, 2024 remeasurement as achievement of the 2024 target is not expected. As part of the Agreement and Plan of Merger (the “Merger Agreement”) of MoLo, executed on November 1, 2021, certain additional cash consideration is required to be paid by the Company based on the achievement of certain incremental targets of adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for each of the years ended December 31, 2023, 2024, and 2025. The adjusted EBITDA metric was below target for 2023, resulting in no earnout payment for 2023. At 100% of the target, the cumulative additional consideration through 2025 would be $215.0 million, consisting of target earnout payments of $70.0 million and $145.0 million, including catch-up provisions, for the years ended December 31, 2024 and 2025, respectively. Possible undiscounted cash consideration could range from a total of $95.0 million at 80% of target to $455.0 million at 300% of target, as outlined in the Merger Agreement. The estimated fair value of contingent consideration is determined by assessing Level 3 inputs. The Level 3 assessments utilize a Monte Carlo simulation with inputs including scenarios of estimated revenues and adjusted EBITDA to be achieved for the applicable performance periods, volatility factors applied to the simulations, and the discount rate applied, which was 13.4% and 13.3% as of March 31, 2024 and December 31, 2023, respectively. Changes in the significant unobservable inputs might result in a significantly higher or lower fair value at the reporting date. The increase in fair value of contingent earnout consideration as of March 31, 2024, compared to December 31, 2023, primarily relates to the shorter discount period remaining until the expected payout.

Schedule of changes in fair value of liabilities measured at fair value using inputs categorized in Level 3


		Contingent Consideration
		(in thousands)
Balance at December 31, 2023		$	92,900
Change in fair value included in operating income			7,320
Balance at March 31, 2024		$	100,220

Schedule of assets measured at fair value on a nonrecurring basis


		Equity Investment
		(in thousands)
Balance at December 31, 2023		$	28,739
Change in fair value included in other income			(28,739)
Balance at March 31, 2024		$	—