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Fair Value Measurements
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block] Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability is as follows:
•Level 1: Observable inputs such as quoted prices in active markets;
•Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
•Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.
Observable market data is required to be used in making fair value measurements when available. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of September 30, 2024:
In millionsFair ValueFair value measurements
Level 1Level 2Level 3
Assets:
Derivative instruments$8.1 $— $8.1 $— 
Liabilities:
Derivative instruments5.5 — 5.5 — 
Contingent consideration77.3 — — 77.3 
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2023:
In millionsFair ValueFair value measurements
Level 1Level 2Level 3
Assets:
Derivative instruments$4.1 $— $4.1 $— 
Liabilities:
Derivative instruments4.8 — 4.8 — 
Contingent consideration90.3 — — 90.3 
Derivative instruments include forward foreign currency contracts and instruments related to non-functional currency balance sheet exposures and commodity swaps. The fair value of the foreign exchange derivative instruments is determined based on a pricing model that uses spot rates and forward prices from actively quoted currency markets that are readily accessible and observable. The fair value of the commodity derivative instruments is valued under a market approach using published prices, where applicable, or dealer quotes.
The carrying values of cash and cash equivalents, short-term investments, accounts receivable, and accounts payable are a reasonable estimate of their fair value due to the short-term nature of these instruments. There have been no transfers between levels of the fair value hierarchy.
On November 2, 2023, the Company acquired 100% of Nuvolo Technologies Corporation. In connection with the acquisition, the Company agreed to two contingent consideration arrangements. The first contingent consideration arrangement, payable up to $90.0 million in cash, is based on the attainment of key revenue targets from November 2, 2023 through April 2025. If the first contingent consideration targets are met, a second contingent consideration arrangement with no maximum earnout is available to the sellers based on revenues in excess of the initial targets attained from a specified customer contract through April 2025.
Each quarter the Company evaluates the fair value of the liability as assumptions change and any non-cash adjustments are recorded in Selling and administrative expenses in the Condensed Consolidated Statements of Earnings. Contingent consideration related to acquisitions are measured at fair value using Level 3 unobservable inputs. The fair value of the contingent consideration is determined using the Monte Carlo simulation model based on revenue projections during the earnout period, implied revenue volatility and a risk adjusted discount rate.
The changes in the fair value of the Company's Level 3 liabilities were as follows:
In millionsSeptember 30,
2024
Balance at beginning of period$90.3 
Change in fair value of contingent consideration (8.9)
Measurement period adjustment(4.1)
Balance at end of period$77.3 
The following inputs and assumptions were used in the Monte Carlo simulation model to estimate the fair value of the contingent consideration:
September 30,
2024		December 31,
2023
Discount rate8.59% - 8.73%8.14% - 8.48%
Volatility 15.70 %16.20 %
Certain assets are measured at fair value on a non-recurring basis. The Company's equity investments without a readily available fair value are accounted for using the measurement alternative and are measured at fair value when observable transactions of identical or similar securities occurs, or due to an impairment. When indicators of impairment exist or observable price changes of qualified transactions occur, the respective equity investment would be classified within Level 3 of the fair value hierarchy due to the absence of quoted market prices, the inherent lack of liquidity and unobservable inputs used to measure fair value that require management’s judgment.