Fair Value Measurements
As of December 25, 2025 and December 26, 2024, the Company had certain financial assets and liabilities on its Consolidated Balance Sheets that were required to be measured at fair value on a recurring or non-recurring basis. The estimated fair values of financial assets and liabilities such as cash and cash equivalents, receivables, prepaid expenses and other current assets, other assets, accounts payable, and accrued expenses and other current liabilities approximate their respective carrying values as reported within the Consolidated Balance Sheets. Refer to Note 1, “Summary of Significant Accounting Policies” and Note 15, “Acquisition” for a discussion of the valuation of goodwill and intangible assets, respectively. See Note 10, “Debt” for discussion of the fair value of the Company’s debt.
Recurring Fair Value Measurements
As of December 25, 2025, the Company’s contingent earn-out liability had an aggregate estimated fair value of $0.8 million, which is included in accrued expenses and other current liabilities within the Consolidated Balance Sheets. The contingent earn-out liability is classified as Level 3 within the fair value hierarchy due to the use of unobservable inputs that are significant to the valuation. For the fiscal year ended December 25, 2025, $0.4 million was recognized as a benefit in SG&A expenses within the Consolidated Statements of Operations and Comprehensive Income due to a decrease in the fair value of the contingent earn-out liability. The table below summarizes changes in contingent earn-out liabilities during the fiscal year ended December 25, 2025:
| | | | | |
| in thousands | Contingent Earn-out Liabilities |
Balance at December 26, 2024 | $ | 4,502 | |
| |
Fair value adjustment | (375) | |
| Payments | (3,377) | |
Balance at December 25, 2025 | $ | 750 | |
In fiscal 2025, the Company adjusted the fair value of the contingent earn-out liability based on actual performance relative to performance period targets. The earn-out related to the fiscal 2025 performance period will be paid in the first quarter of fiscal 2026.
Interest Rate Cap Contract
The Company has an outstanding interest rate cap contract that was valued primarily using Level 2 inputs based on data readily observable in public markets. The Company’s interest rate cap contract was negotiated with a counterparty without going through a public exchange. Accordingly, the Company’s fair value assessment for the derivative contract gave consideration to the risk of counterparty default as well as the Company’s own credit risk. Refer to Note 8, “Derivatives and Risk Management” for additional details related to the Company’s interest rate cap contract.
Non-recurring Fair Value Measurements
Fair value measurements are made in connection with the Company’s acquisitions. Refer to Note 15, “Acquisition,” for additional details. There were no other assets or liabilities as of December 25, 2025 or December 26, 2024 that resulted from fair value measurements made on a non-recurring basis.