Fair Value Measurements
Financial Assets and Liabilities
The fair value of the Company's long-term debt is estimated based on current market rates for the specific debt instrument. Judgment is required to develop these estimates. As such, the estimated fair value of long-term debt is classified within Level 2, as defined under U.S. GAAP.
The gross carrying amount and fair value of the Company’s debt at January 31, 2026 are as follows (in thousands):
| | | | | | | | | | | |
| Carrying Amount | | Fair Value |
| ABL Revolving Facility | $ | 120,000 | | | $ | 120,000 | |
| First Lien Term Loan | 400,000 | | | 404,252 | |
| Total Debt | $ | 520,000 | | | $ | 524,252 | |
The gross carrying amount and fair value of the Company’s debt at February 1, 2025 are as follows (in thousands):
| | | | | | | | | | | |
| Carrying Amount | | Fair Value |
| ABL Revolving Facility | $ | 175,000 | | | $ | 175,000 | |
| First Lien Term Loan | 400,000 | | | 402,500 | |
| Total Debt | $ | 575,000 | | | $ | 577,500 | |
Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
The Company believes that the carrying amounts of its other financial instruments, including cash, accounts receivable, and accounts payable approximate their fair values due to the short-term maturities of these instruments.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.