Financial Instruments and Fair Value Measurements
Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework 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: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
•Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels.
Financial Instruments
The carrying values of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short duration of these financial instruments.
The following table summarizes the fair value measurement of the Company’s long-term debt:
| | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| (In thousands) | Carrying Amount | | Fair Value | | Fair Value Hierarchy |
| Term Loan B-1 | $ | 390,000 | | | $ | 390,488 | | | Level 2 |
| Revolving Credit Facility | 45,000 | | | 44,550 | | | Level 2 |
| Finance lease liabilities | 2,335 | | | 2,335 | | | Level 3 |
| Notes payable | 1,343 | | | 1,343 | | | Level 3 |
| Total debt | $ | 438,678 | | | $ | 438,716 | | | |
| | | | | | | | | | | | | | | | | |
| December 31, 2024 |
| (In thousands) | Carrying Amount | | Fair Value | | Fair Value Hierarchy |
| Term Loan B-1 | $ | 394,000 | | | $ | 393,508 | | | Level 2 |
| Revolving Credit Facility | 20,000 | | | 19,700 | | | Level 2 |
| Finance lease liabilities | 3,643 | | | 3,643 | | | Level 3 |
| Total debt | $ | 417,643 | | | $ | 416,851 | | | |
The estimated fair value of the Company’s term loan and outstanding borrowings under the Revolving Credit Facility is based on a relative value analysis performed as of December 31, 2025 and 2024. The finance lease liabilities and notes payable are fixed-rate debt, are not traded and do not have observable market inputs, therefore, the fair value is estimated to be equal to the carrying value.