Everus Construction Group, Inc.ECG
Everus Construction Group, Inc. Fair Value Disclosure
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. ASC 820 - Fair Value Measurement (“ASC 820”) establishes a three-tier hierarchy for grouping assets and liabilities, based on the significance and availability of inputs in active markets. The estimated fair values of the Company’s assets and liabilities measured on a recurring basis are determined using the market approach.
In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs use data points that are observable such as quoted prices, interest rates and yield
curves. Fair values determined by Level 3 inputs are “unobservable data points” for the asset or liability and include situations where there is little, if any, market activity for the asset or liability.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company measured its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in the consolidated statements of income. The Company anticipates using these investments, which consist of COLI contracts, to satisfy its obligations under its unfunded, nonqualified deferred compensation plan for the Company’s executive officers and certain key management employees. The Company invests in these fixed-income and equity securities for the purpose of earning investment returns and capital appreciation. Prior to the Separation, the Company was a participant in MDU Resources’ benefit and compensation plans. These investments, which totaled $7.6 million and $4.8 million as of December 31, 2025 and 2024, respectively, were included in Investments on the consolidated balance sheets. The Company recognized net unrealized gains on these investments of $0.8 million and $0.6 million for the years ended December 31, 2025 and 2024, respectively. The net unrealized losses on these investments were immaterial for the year ended December 31, 2023. The changes in fair value were classified in Other income, net on the consolidated statements of income.
The estimated fair value of the Company’s Level 2 COLI contracts was based on contractual cash surrender values that were determined primarily by investments in managed separate accounts of the insurer. These amounts approximated fair value. The managed separate accounts were valued based on other observable inputs or corroborated market data.
Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value.
The estimated fair values of the Company’s Cash, cash equivalents and restricted cash, Receivables, Accounts payable and Other accrued liabilities approximated their carrying value due to the short-term maturities of these instruments.
The Company has a captive insurance arrangement in which a Captive Cell within a captive insurance company holds cash, classified as restricted cash, and certain other accrued liabilities and other noncurrent liabilities in order to manage and administer insurance claims on behalf of the Company. The fair values of the assets and liabilities held by the Captive Cell approximated their fair values as of both December 31, 2025 and 2024. Refer to Note 2 – Basis of Presentation and Summary of Significant Accounting Policies for additional information on the Company’s captive insurance arrangement.
The Company’s assets measured at fair value on a recurring basis were as follows:
Fair Value Measurements as of December 31, 2025, Using | |||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2025 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
COLI contracts | $ | — | $ | 7,615 | $ | — | $ | 7,615 | |||||||||||||||
Total assets measured at fair value | $ | — | $ | 7,615 | $ | — | $ | 7,615 | |||||||||||||||
Fair Value Measurements as of December 31, 2024, Using | |||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2024 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
COLI contracts | $ | — | $ | 4,766 | $ | — | $ | 4,766 | |||||||||||||||
Total assets measured at fair value | $ | — | $ | 4,766 | $ | — | $ | 4,766 | |||||||||||||||
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The Company applies the provisions of ASC 820 to its nonrecurring, nonfinancial measurements of nonfinancial assets and liabilities, including long-lived asset impairments. These nonfinancial assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. The Company reviews the carrying value of its long-lived assets, excluding goodwill, whenever events or changes in circumstances indicate that such carrying amounts may not be recoverable. Refer to Note 2 – Basis of Presentation and Summary of Significant Accounting Policies for additional information on impairment of long-lived assets.
Assets and Liabilities Not Measured at Fair Value
The Company's long-term debt was not measured at fair value on the consolidated balance sheets as of both December 31, 2025 and 2024, but corresponding fair values are being provided for disclosure purposes only. The fair values were categorized as Level 2 in the fair value hierarchy and were based on discounted cash flows using current market interest rates. Refer to Note 7 – Debt for additional information on the Company’s long-term debt.
The estimated fair values of the Company's Level 2 long-term debt, including current long-term debt, were as follows as of December 31:
2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
Carrying value | $ | 285,000 | $ | 300,000 | |||||||
Fair value | $ | 282,115 | $ | 298,559 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
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.