Fair Value and Equity Investments

6 Months Ended

Jun. 30, 2025

Fair Value and Equity Investments [Abstract]

Fair Value and Equity Investments

8. Fair Value and Equity Investments

Fair Value

The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximates fair values due to the short-term nature of these instruments. The carrying value of debt approximates fair value due to the variable 30-day interest rate. Fair value estimates are made at a specific point in time, based on relevant market information.

The FASB Codification defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. On a quarterly basis, the Company measures at fair value certain financial assets, including cash equivalents. Accounting standards specify a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:

■ Level 1 – quoted prices in active markets for identical assets or liabilities;

■ Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

■ Level 3 – unobservable inputs based on the Company’s own assumptions.

Accounting standards permit companies, at their option, to measure certain financial instruments and other eligible items at fair value. The Company has elected not to apply the fair value option to existing eligible items beyond what is required by US GAAP.

The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (U.S. dollars in thousands):

	Fair Value at June 30, 2025
	Level 1		Level 2			Level 3			Total
Financial assets:
Cash equivalents and current investments	$	8,531		$	—		$	—		$	8,531
Derivative financial instruments asset		—			700			—			700
Life insurance contracts		—			—			46,026			46,026
Total	$	8,531		$	700		$	46,026		$	55,257

	Fair Value at December 31, 2024
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents and current investments	$	23,914	$	—	$	—	$	23,914
Derivative financial instruments asset		—		4,708		—		4,708
Life insurance contracts		—		—		44,091		44,091
Contingent consideration		—		—		—		—
Total	$	23,914	$	4,708	$	44,091	$	72,713

The following table provides a summary of changes in fair value of the Company’s Level 3 life insurance contracts (U.S. dollars in thousands):

	2025		2024
Beginning balance at January 1	$	44,091	$	45,041
Actual return on plan assets		1,935		3,532
Ending balance at June 30	$	46,026	$	48,573

Life insurance contracts: Accounting Standards Codification (“ASC”) 820 preserves practicability exceptions to fair value measurements provided by other applicable provisions of U.S. GAAP. The guidance in ASC 715-30-35-60 allows a reporting entity, as a practical expedient, to use cash surrender value or conversion value as an expedient for fair value when it is present. Accordingly, the Company determines the fair value of its life insurance contracts as the cash-surrender value of life insurance policies held in its Rabbi Trust.

The following table provides a summary of changes in fair value of the Company’s Level 3 contingent consideration (U.S. dollars in thousands):

	2024
Beginning balance at January 1	$	(6,300	)
Payments		6,300
Ending balance at June 30	$	—

Contingent consideration: Contingent consideration represents the obligations incurred in connection with acquisitions. The estimate of fair value of the contingent consideration obligations requires subjective assumptions to be made regarding the future business results, discount rates, discount periods and probabilities assigned to various potential business result scenarios and was determined using probability assessments with respect to the likelihood of reaching various targets or of achieving certain milestones. The fair value measurement is based on significant inputs unobservable in the market and thus represents a Level 3 measurement. Changes in current expectations of progress could change the probability of achieving the targets within the measurement periods and result in an increase or decrease in the fair value of the contingent consideration obligation.

Equity Investments

The Company maintains equity investments in companies which are accounted for under the measurement alternative described in ASC 321-10-35-2 for equity securities that lack readily determinable fair values. The carrying amount of an equity security held by the Company without readily determinable fair values was $0.0 and $28.1 million as of June 30, 2025 and December 31, 2024, respectively. The Company recognized $18.1 million of cumulative upward fair value adjustments, based on the valuation of additional equity issued by the investee which was deemed to be an observable transaction of a similar investment under ASC 321. During the three months ended March 31, 2025, based on significant deterioration of the business prospects of the investment, the Company recorded a $28.1 million impairment of the investment. These charges were recorded within Other income (expense), net on the Consolidated Statement of Income. The first quarter of 2025 estimated fair value was determined using a market-based method with level 3 inputs, including revenue and earnings multiples. The Company also had equity securities held without readily determinable fair values of $14.0 million and $7.6 million as of June 30, 2025 and December 31, 2024, respectively.