v3.26.1
Fair Value
 6 Months Ended
Jul. 31, 2026
Fair Value [Abstract]  
Fair Value

Note 5. Fair Value

 

The Company applies ASC 820, which provides a framework for measuring fair value under accounting principles generally accepted in the United States of America. This accounting standard defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

 

The Company determines the fair market values of its financial instruments based on the fair value hierarchy established by ASC 820 which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values which are provided below. The Company carries certain cash equivalents, investments, and derivative instruments at fair value.

 

The fair values of derivative assets and liabilities traded in the over-the-counter market are determined using quantitative models that require the use of multiple market inputs including interest rates, prices and indices to generate pricing and volatility factors, which are used to value the position. The predominance of market inputs are actively quoted and can be validated through external sources, including

brokers, market transactions and third-party pricing services. Estimation risk is greater for derivative asset and liability positions that are either option-based or have longer maturity dates where observable market inputs are less readily available or are unobservable, in which case interest rate, price or index scenarios are extrapolated in order to determine the fair value. The fair values of derivative assets and liabilities include adjustments for market liquidity, counterparty credit quality, the Company’s own credit standing and other specific factors, where appropriate.

 

To ensure the prudent application of estimates and management judgment in determining the fair value of derivative assets and liabilities, investments and property and equipment, various processes and controls have been adopted, which include: (i) model validation that requires a review and approval for pricing, financial statement fair value determination and risk quantification; and (ii) periodic review and substantiation of profit and loss reporting for all derivative instruments.

 

Financial assets and liabilities measured at fair value on a recurring and nonrecurring basis at July 31, 2026 are summarized below (amounts in thousands):

 

   Level 1   Level 2   Level 3   Fair Value 
                     
Forward purchase contracts asset (1)  $-   $487   $-   $487 
Commodity futures asset (2)   1,339    -    -    1,339 
Production tax credit asset (3)   -    -    25,978    25,978 
Total assets  $1,339   $487   $25,978   $27,804 
                     
Forward purchase contracts liability (4)  $-   $2,540   $-   $2,540 

 

Financial assets and liabilities measured at fair value on a recurring basis at January 31, 2026 are summarized below (amounts in thousands):

 

   Level 1   Level 2   Level 3   Fair Value 
                     
Forward purchase contracts asset (1)  $-   $280   $-   $280 
Commodity futures asset (2)   433    -    -    433 
Total assets  $433   $280   $-   $713 
                     
Forward purchase contracts liability (4)  $-   $529   $-   $529 

 

  (1)   The forward purchase contracts asset is included in “Prepaid expenses and other” on the accompanying Consolidated Balance Sheets.
  (2)   The commodity futures assets and liabilities are netted with cash collateral due from broker and included in “Prepaid expenses and other” on the accompanying Consolidated Balance Sheets.
  (3)   Production tax credit assets are included in “Other assets” on the Consolidated Balance Sheets and represent the Company’s estimated net proceeds from the future sale of the credits. The fair value is measured on a nonrecurring basis and is based on estimates such as the expected qualified gallons sold, the gross credit achieved per gallon, sales discount, broker fees and potential insurance costs. As such, disclosure as Level 3 is appropriate.
  (4)   The forward purchase contracts liability is included in “Accrued expenses and other current liabilities” on the accompanying Consolidated Balance Sheets.

 

There were no Level 3 fair value measurements as of April 30, 2026, as the Company’s intent at the time was to utilize the tax credits and as such, the credits did not include any estimated discounts or selling expenses. The Company has since concluded it intends to monetize the transferable tax credits earned in fiscal year 2026. The following table summarizes the roll-forward of Level 3 fair value measurements as of July 31, 2026 (in thousands):

 

Fair Value as of April 30, 2026  $- 
Generated transferable tax credits   25,978 
Fair value as of July 31, 2026  $25,978