v3.26.1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements

NOTE 16: FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value into the following hierarchy are determined as follows:

Level 1 -

Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 -

Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 -

Unobservable inputs for the asset or liability.

For cash and cash equivalents, accounts receivable, income taxes receivable and accounts payable, the fair value approximates the carrying value due to the short maturity periods of these financial instruments. For long-term borrowings, the fair value is measured using Level 2 market values.

The interest rate swaps, interest rate caps and foreign exchange contracts are carried at fair value in the Consolidated Balance Sheets. The fair value measurement is classified within Level 2 of the fair value hierarchy, as the inputs to the derivative pricing model are generally observable and do not contain a high level of subjectivity. The fair value of the interest rate agreements is estimated using industry standard valuation models using market-based observable inputs.

Borrowings under the Company’s 2024 Term Loan Facilities, which are SOFR-based, approximate fair value at June 30, 2026. The inputs used to measure the fair value of the Company’s debt instruments are classified as Level 2 within the fair value hierarchy.

Valuation of Contingent Consideration Liability

The fair value of earnout consideration was estimated based on applying a Monte Carlo simulation method to forecast achievement of the gross profit targets. This method involves many possible value outcomes which are evaluated to establish an estimated value. Key inputs in the valuation include volatility and discount rates. Due to the significant unobservable inputs used in the valuations, these liabilities are categorized within Level 3 of the fair value hierarchy.

The Company determined the initial value for the contingent consideration liability of $15.2 million at December 31, 2024, using the Level 3 inputs below as of the issuance date on August 23, 2024. As of June 30, 2026, the estimated fair value of the remaining contingent consideration is $3.5 million.

The following table represents the significant inputs used in calculating the fair value of the contingent consideration liability on the issuance date:

Longest midpoint term

 

 

1.86

 

Gross profit discount rate

 

 

10.7

%

Risk-free rate

 

 

3.9

%

Gross profit volatility

 

 

23.3

%

Payment discount rate

 

 

13.2

%

The contingent consideration measured at fair value using unobservable inputs decreased from the initial measurement of $15.2 million as of December 31, 2024 to $8.2 million as of December 31, 2025. The Company paid $7.0 million of contingent consideration during the year ended December 31, 2025 and an additional $7.0 million during the six months ended June 30, 2026. As of June 30, 2026, the remaining $3.5 million contingent consideration liability is recorded in Accrued and other current liabilities.

The following table summarizes the carrying amounts and fair values of financial instruments:

 

 

 

 

As of June 30, 2026

 

 

As of December 31, 2025

 

 

 

Level

 

Carrying
Amount

 

 

Fair
Value

 

 

Carrying
Amount

 

 

Fair
Value

 

 

 

 

 

(in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

Prepaid expenses and other current assets

 

2

 

$

—

 

 

$

—

 

 

$

1,757

 

 

$

1,757

 

Total assets

 

 

 

 

$

—

 

 

$

—

 

 

$

1,757

 

 

$

1,757

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate caps

Accrued expenses and other current liabilities

 

2

 

$

3,412

 

 

$

3,412

 

 

$

6,808

 

 

$

6,808

 

Foreign exchange contracts

Accrued expenses and other current liabilities

 

2

 

 

1,298

 

 

 

1,298

 

 

 

—

 

 

 

—

 

Contingent consideration - current

Accrued expenses and other current liabilities

 

3

 

 

3,500

 

 

 

3,500

 

 

 

7,000

 

 

 

7,000

 

Contingent consideration - non-current

Other non-current liabilities

 

3

 

 

—

 

 

 

—

 

 

 

1,150

 

 

 

1,150

 

Total liabilities

 

 

 

 

$

8,210

 

 

$

8,210

 

 

$

14,958

 

 

$

14,958

 

 

The gains (losses) on the Company’s derivative instruments were as follows:

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

Statement of Operations Classification

 

2026

 

 

2025

 

 

2026

 

 

2025

 

 

 

 

(in thousands)

 

 

(in thousands)

 

Amount of (loss) gain recognized in net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

Interest expense

 

$

—

 

 

$

621

 

 

$

—

 

 

$

1,242

 

Interest rate caps

 

Interest expense

 

 

(1,747

)

 

 

(2,769

)

 

 

(3,379

)

 

 

(5,468

)

Foreign exchange contracts

 

Selling, general and administrative expense

 

 

11

 

 

 

680

 

 

 

79

 

 

 

680

 

Total loss recognized in net income

 

 

 

$

(1,736

)

 

$

(1,468

)

 

$

(3,300

)

 

$

(3,546

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Comprehensive Income Classification

 

 

 

 

 

 

 

 

 

 

 

 

Amount of (loss) gain recognized in other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

Cash flow hedge gain

 

$

—

 

 

$

504

 

 

$

—

 

 

$

495

 

Interest rate caps

 

Cash flow hedge loss

 

 

(107

)

 

 

(936

)

 

 

(76

)

 

 

(3,560

)

Foreign exchange contracts

 

Cash flow hedge (loss) gain

 

 

(886

)

 

 

4,058

 

 

 

(2,977

)

 

 

4,058

 

Total (loss) gain recognized in other comprehensive income

 

 

 

$

(993

)

 

$

3,626

 

 

$

(3,053

)

 

$

993