Financial Instruments and Contingent Consideration

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

Financial Instruments and Contingent Consideration

NOTE 19. FINANCIAL INSTRUMENTS AND CONTINGENT CONSIDERATION

We do not hold or issue financial instruments for trading purposes. The estimated fair values of our financial instruments and contingent consideration are as follows:

	December 31, 2023						December 31, 2022
	Carrying amount			Estimated fair value			Carrying amount			Estimated fair value
Assets (liabilities), net:
Total long-term debt, including current portion	$	(586.8	)	$	(586.8	)	$	(651.1	)	$	(645.3	)
Interest rate swap contracts		(0.4	)		(0.4	)		11.4			11.4
Acquisition-related contingent consideration		(1.6	)		(1.6	)		(15.2	)		(15.2	)

The carrying amounts of cash and cash equivalents, receivables, accounts payable, and accrued expenses approximate fair value because of the short-term maturity of these instruments. The fair value estimates of long-term debt are based on quotes from a major financial institution of recently observed trading levels of our Term Loan A debt. The fair value estimates for interest rate swap contracts are estimated with the assistance of third-party valuation experts and verified by obtaining quotes from major financial institutions. We engaged independent, third-party valuation specialists to determine the fair value estimates for acquisition-related contingent consideration payable based on performance, which were primarily measured using a Monte Carlo simulation. As of December 31, 2023, acquisition-related contingent consideration liabilities of $1.6 million related to future financial and performance milestones for the BOK and Insolcorp acquisitions were classified as long-term liabilities on our Consolidated Balance Sheets. As of December 31, 2022, $15.2 million of acquisition-related contingent consideration liabilities payable, related to the final achievement of certain financial and performance milestones through December 31, 2022 for the acquisitions of Moz and Turf, was classified as accounts payable and accrued expenses on our Consolidated Balance Sheet and was equal to fair value as milestone achievements were known.

The fair value measurement of assets and liabilities measured at fair value on a recurring basis and reported on the Consolidated Balance Sheets is summarized below:

	December 31, 2023						December 31, 2022
	Fair value based on						Fair value based on
	Other observable inputs			Other unobservable inputs			Other observable inputs
	Level 2			Level 3			Level 2
Assets (liabilities), net:
Interest rate swap contracts	$	(0.4	)	$	-		$	11.4
Acquisition-related contingent consideration		-			(1.6	)		-

Acquisition-related contingent consideration of $1.6 million as of December 31, 2023 was measured with the use of significant unobservable inputs, which included financial projections over the earn-out period, the volatility of the underlying financial metrics and estimated discount rates. All changes in the contingent consideration liability subsequent to the initial acquisition-date measurements were recorded as a component of operating income on our Consolidated Statements of Earnings and Comprehensive Income.

The following table summarizes the weighted-average of the significant unobservable inputs as of December 31, 2023:

	BOK			Insolcorp
Unobservable input
Volatility		24.3	%		20.0	%
Discount rates		4.5	%		4.8	%

The changes in fair value of the acquisition-related contingent consideration liabilities for the years ended December 31, 2023, 2022 and 2021 were as follows:

	Fair Value of Contingent Consideration
Balance as of December 31, 2020	$	16.9
(Gain) related to change in fair value of contingent consideration		(4.1	)
Balance as of December 31, 2021	$	12.8
Cash consideration paid		(8.6	)
Loss related to change in fair value of contingent consideration		11.0
Balance as of December 31, 2022	$	15.2
Cash consideration paid		(15.2	)
Acquisition date fair value of BOK contingent consideration		0.8
Acquisition date fair value of Insolcorp contingent consideration		0.7
Loss related to change in fair value of contingent consideration		0.1
Balance as of December 31, 2023	$	1.6

As of December 31, 2023, acquisition-related contingent consideration liabilities represented additional cash consideration payable related to our acquisitions of Insolcorp and BOK that will be paid upon the final achievement of certain financial and performance milestones. As of December 31, 2022, the acquisition-related contingent consideration liabilities represented the additional cash consideration payable related to our acquisition of Turf upon the final achievement of certain financial and performance milestones through December 31, 2022, which we paid in the first quarter of 2023.

During 2023, the change in fair value was due to changes in Monte Carlo simulation inputs for BOK. During 2022, the change in fair value was due to changes in Turf actual and projected results over the earn out period. During 2021, the change in fair value was primarily due to changes in Turf and Moz actual and projected results over the earn out period.

During 2023, we paid $15.2 million of additional cash consideration for the acquisition of Turf, which represented the final achievement of certain financial and performance milestones through December 31, 2022. During 2022, we paid $8.6 million of additional cash consideration for the acquisitions of Moz and Turf, which represented the final achievement of certain financial and performance milestones through December 31, 2021.

The additional cash consideration paid was classified as cash flows from financing activities in our Consolidated Statements of Cash Flows, up to the acquisition date fair value. The portions of additional cash consideration paid in excess of the acquisition date fair value was classified as cash flows from operating activities in our Consolidated Statements of Cash Flows.