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Fair value of financial instruments | 3 Months Ended
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Mar. 31, 2024
Fair value of financial instruments [Abstract] |
Fair value of financial instruments | Note 20 ‑ Fair value of financial instruments: ASC Topic 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and disclosing fair value measurements. ASC Topic 820 establishes a three‑level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.
| • | Level 1 ‑ Valuation is based on quoted prices in active markets for identical assets and liabilities;
| • | Level 2 ‑ Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model‑based techniques in which all significant inputs are observable in the market;
| • | Level 3 ‑ Valuation is derived from model‑based techniques in which at least one significant input is unobservable and based on the Company’s own estimates about the assumptions that market participants would use to value the asset or liability.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s assessment of the significance of particular inputs to those fair value measurements requires judgment and considers factors specific to each asset or liability. The Company’s financial instruments measured or disclosed at fair value are summarized below. The summary excludes cash and cash equivalents, receivables and accounts payable, all of which had fair values approximating their carrying values due to the liquid nature and short maturities of these instruments.
|  |  |  | Fair Value (In Thousands) |
Asset or Liability |  | Fair Value Hierarchy |  | March 31, 2024 |  |  | December 31, 2023 |
Measured at fair value on a recurring basis: |  |  |  |  |  |  |  |
Contingent consideration |  | Level 3 |  | $ | 3,346 |  |  | $ | 3,282 |
Disclosed at fair value: |  |  |  |  |  |  |  |  |  |
Borrowings under Credit Facility |  | Level 2 |  | $ | — |  |  | $ | 71,000 |
Seller note payable |  | Level 2 |  | $ | 4,247 |  |  | $ | 4,627 |
The carrying value of the borrowings under the Credit Facility approximates fair value due to variable rate terms that approximate market rates. The carrying value of the seller note payable approximates fair value because the interest rate on the note approximates market rates as of March 31, 2024 and December 31, 2023. The fair value of the contingent consideration related to the Devon Street acquisition as of the acquisition date was estimated using a Monte Carlo simulation to model the likelihood of achieving the agreed‑upon gross margin target based on available information as of the acquisition date. The valuation methodology includes assumptions and judgments regarding the gross margin discount rate, gross margin volatility, drift rate, and cost of debt, which are primarily Level 3 assumptions. The contingent consideration liability is remeasured at fair value on a quarterly basis. The change in the fair value of the contingent consideration from the acquisition date to December 31, 2023 and March 31, 2024 of approximately $0.3 million and $0.1 million, respectively, relates to a change in the estimated fair value of the gross margin earnout payment liability and is included in other income, net in the accompanying condensed consolidated statement of income for the three months ended March 31, 2024.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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