FAIR VALUE

3 Months Ended

Apr. 02, 2022

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

FAIR VALUE

FAIR VALUE

Fair Value Measurements—Certain acquisitions made by the Company require the payment of contingent amounts of purchase consideration. These payments are contingent on specified operating results being achieved in periods subsequent to the acquisition and will only be made if earn-out thresholds are achieved. Contingent consideration obligations are measured at fair value each reporting period. Any adjustments to fair value are recognized in earnings in the period identified.

The fair value of contingent consideration as of April 2, 2022 and January 1, 2022 was:

	April 2, 2022		January 1, 2022
Current portion of acquisition-related liabilities and Accrued expenses:
Contingent consideration	$	133	$	129
Acquisition-related liabilities and Other noncurrent liabilities:
Contingent consideration	$	1,115	$	1,239

The fair value of contingent consideration was based on unobservable, or Level 3, inputs, including projected probability-weighted cash payments and a 9.5% discount rate, which reflects a market discount rate. Changes in fair value may occur as a result of a change in actual or projected cash payments, the probability weightings applied by the Company to projected payments or a change in the discount rate. Significant increases or decreases in any of these inputs in isolation could result in a lower, or higher, fair value measurement. There were no material valuation adjustments to contingent consideration as of April 2, 2022 and April 3, 2021.

Financial Instruments—The Company’s financial instruments include debt and certain acquisition-related liabilities (deferred consideration and noncompete obligations). The carrying value and fair value of these financial instruments as of April 2, 2022 and January 1, 2022 was:

	April 2, 2022				January 1, 2022
	Fair Value		Carrying Value		Fair Value		Carrying Value
Level 1
Long-term debt(1)	$	1,596,591	$	1,607,767	$	1,653,085	$	1,609,298
Level 3
Current portion of deferred consideration and noncompete obligations(2)	12,945		12,945		12,981		12,981
Long term portion of deferred consideration and noncompete obligations(3)	21,813		21,813		32,130		32,130

(1)$6.4 million was included in current portion of debt as of April 2, 2022 and January 1, 2022.

(2)Included in current portion of acquisition-related liabilities on the consolidated balance sheets.

(3)Included in acquisition-related liabilities on the consolidated balance sheets.

The fair value of debt was determined based on observable, or Level 2, inputs, such as interest rates, bond yields and quoted prices in inactive markets. The fair values of the deferred consideration and noncompete obligations were determined based on unobservable, or Level 3, inputs, including the cash payment terms in the purchase agreements and a discount rate reflecting the Company’s credit risk. The discount rate used is generally consistent with that used when the obligations were initially recorded.

Securities with a maturity of three months or less are considered cash equivalents and the fair value of these assets approximates their carrying value.

Summit Materials, LLC

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

FAIR VALUE

FAIR VALUE

Fair Value Measurements—Certain acquisitions made by the Company require the payment of contingent amounts of purchase consideration. These payments are contingent on specified operating results being achieved in periods subsequent to the acquisition and will only be made if earn-out thresholds are achieved. Contingent consideration obligations are measured at fair value each reporting period. Any adjustments to fair value are recognized in earnings in the period identified.

The fair value of contingent consideration as of April 2, 2022 and January 1, 2022 was: 

	April 2, 2022		January 1, 2022
Current portion of acquisition-related liabilities and Accrued expenses:
Contingent consideration	$	133	$	129
Acquisition-related liabilities and Other noncurrent liabilities:
Contingent consideration	$	1,115	$	1,239

The fair value of contingent consideration was based on unobservable, or Level 3, inputs, including projected probability-weighted cash payments and a 9.5% discount rate, which reflects a market discount rate. Changes in fair value may occur as a result of a change in actual or projected cash payments, the probability weightings applied by the Company to projected payments or a change in the discount rate. Significant increases or decreases in any of these inputs in isolation could result in a lower, or higher, fair value measurement. There were no material valuation adjustments to contingent consideration as of April 2, 2022 and April 3, 2021.

Financial Instruments—The Company’s financial instruments include debt and certain acquisition-related liabilities (deferred consideration and noncompete obligations). The carrying value and fair value of these financial instruments as of April 2, 2022 and January 1, 2022 was:

	April 2, 2022				January 1, 2022
	Fair Value		Carrying Value		Fair Value		Carrying Value
Level 1
Long-term debt(1)	$	1,596,591	$	1,607,767	$	1,653,085	$	1,609,298
Level 3
Current portion of deferred consideration and noncompete obligations(2)	12,945		12,945		12,981		12,981
Long term portion of deferred consideration and noncompete obligations(3)	21,813		21,813		32,130		32,130

(1)$6.4 million was included in current portion of debt as of April 2, 2022 and January 1, 2022.

(2)Included in current portion of acquisition-related liabilities on the consolidated balance sheets.

(3)Included in acquisition-related liabilities on the consolidated balance sheets.

The fair value of debt was determined based on observable, or Level 2, inputs, such as interest rates, bond yields and quoted prices in inactive markets. The fair values of the deferred consideration and noncompete obligations were determined based on unobservable, or Level 3, inputs, including the cash payment terms in the purchase agreements and a discount rate reflecting the Company’s credit risk. The discount rate used is generally consistent with that used when the obligations were initially recorded.

Securities with a maturity of three months or less are considered cash equivalents and the fair value of these assets approximates their carrying value.