Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2024

Fair Value of Financial Instruments

Fair Value of Financial Instruments

6. Fair Value of Financial Instruments

Fair value is defined as 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 (exit price). In determining fair value, the Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

●    Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

●    Level 2— Observable inputs other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the assets or liabilities.

●    Level 3— Valuations based on unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

The Company’s financial assets and liabilities that are not required to be re-measured at fair value in the condensed consolidated balance sheets were as follows:

	Carrying		Estimated
	Value as of		Fair Value as of		Fair Value Measurement at June 30, 2024
	June 30,		June 30,		(Using Fair Value Hierarchy)
	2024		2024		Level 1		Level 2		Level 3
Liabilities:
2026 Senior Notes	$	267,897	$	273,818	$	—	$	273,818	$	—
2026 ABL Revolver	$	4,000	$	4,000	$	—	$	4,000	$	—

	Carrying		Estimated
	Value as of		Fair Value as of		Fair Value Measurement at December 31, 2023
	December 31,		December 31,		(Using Fair Value Hierarchy)
	2023		2023		Level 1		Level 2		Level 3
Liabilities:
2026 Senior Notes	$	267,897	$	261,834	$	—	$	261,834	$	—
2026 ABL Revolver	$	—	$	—	$	—	$	—	$	—

The aggregate fair value of the Company’s 2026 Senior Notes (as defined in Note 8, “Long-Term Debt”) was based on bank quotes. The fair value measurement associated with the 2026 ABL Revolver (as defined in Note 8, “Long-Term Debt”) approximates its carrying value as of June 30, 2024, given the applicable variable interest rates.

The carrying amounts for cash and cash equivalents, accounts receivable and accounts payable each approximate fair value due to their short-term nature.