| FAIR VALUE MEASUREMENTS |
| 8. | FAIR VALUE MEASUREMENTS. |
The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels, as follows:
| ● | Level 1 – Observable inputs – unadjusted quoted prices in active markets for identical assets and liabilities; |
| ● | Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data; and |
| ● | Level 3 – Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable. For fair value measurements using significant unobservable inputs, a description of the inputs and the information used to develop the inputs is required along with a reconciliation of Level 3 values from the prior reporting period. |
Pooled separate accounts – Pooled separate accounts were invested primarily in domestic and international stocks, commercial paper or single mutual funds at December 31, 2025. The net asset value is used as a practical expedient to determine fair value for these accounts. Each pooled separate account provides for redemptions by the Retirement Plan at reported net asset values per share, with little to no advance notice requirement; therefore, these funds are classified within Level 2 of the valuation hierarchy. Derivative Financial Instruments – The Company’s derivative financial instruments consist of commodity positions. The fair values of the commodity positions are based on quoted prices on the commodity exchanges and are designated as Level 1 inputs. Transferable Tax Credits Generated, Net – Transferable tax credits generated, net, consist of the Company’s estimated net proceeds from the sale of credits. The fair value is based on estimates of, among others, actual gallons qualified for sale, gross tax credit per gallon, sales discount, broker fees and insurance costs, which are designated as Level 3 inputs. See Note 1 for additional information. The following table summarizes recurring and nonrecurring fair value measurements by level as of and for the three months ended September 30, 2026 (in thousands):
| | | Fair | | | | | | | | | | |
| | | Value | | | Level 1 | | | Level 2 | | | Level 3 | |
| Assets: | | | | | | | | | | | | |
| Transferable tax credits generated, net | | $ | 7,565 | | | $ | — | | | $ | —
| | | $ | 7,565 | |
| Derivative financial instruments | | | 5,332 | | | | 5,332 | | | | — | | | | — | |
| | | $ | 12,897 | | | $ | 5,332 | | | $ | — | | | $ | 7,565 | |
| | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | |
| Derivative financial instruments | | $ | 1,242 | | | $ | 1,242 | | | $ | — | | | $ | — | |
The following table summarizes recurring and nonrecurring fair value measurements by level at December 31, 2025 (in thousands):
| | | | | | | | | | | | | | | Benefit Plan | |
| | | Fair | | | | | | | | | | | | Percentage | |
| | | Value | | | Level 1 | | | Level 2 | | | Level 3 | | | Allocation | |
| Assets: | | | | | | | | | | | | | | | |
| Derivative financial instruments | | $ | 525 | | | $ | 525 | | | $ | — | | | $ | — | | | | | |
| Transferable tax credits generated, net | | | 7,500 | | | | — | | | | — | | | | 7,500 | | | | | |
| Defined benefit plan assets(1) | | | | | | | | | | | | | | | | | | | | |
| (pooled separate accounts): | | | | | | | | | | | | | | | | | | | | |
| Large U.S. Equity(2) | | | 8,060 | | | | — | | | | 8,060 | | | | — | | | | 36 | % |
| Small/Mid U.S. Equity(3) | | | 3,574 | | | | — | | | | 3,574 | | | | — | | | | 16 | % |
| International Equity(4) | | | 3,479 | | | | — | | | | 3,479 | | | | — | | | | 16 | % |
| Fixed Income(5) | | | 6,988 | | | | — | | | | 6,988 | | | | — | | | | 32 | % |
| | | $ | 30,126 | | | $ | 525 | | | $ | 22,101 | | | $ | 7,500 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | |
| Derivative financial instruments | | $ | 1,067 | | | $ | 1,067 | | | $ | — | | | $ | — | | | | | |
| (1) | Included in other assets, net of defined benefit obligation, in the condensed consolidated balance sheets. |
| (2) | This category includes investments in funds comprised of equity securities of large U.S. companies. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund. |
| (3) | This category includes investments in funds comprised of equity securities of small- and medium-sized U.S. companies. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund. |
| (4) | This category includes investments in funds comprised of equity securities of foreign companies including emerging markets. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund. |
| (5) | This category includes investments in funds comprised of U.S. and foreign investment-grade fixed income securities, high-yield fixed income securities that are rated below investment-grade, U.S. treasury securities, mortgage-backed securities, and other asset-backed securities. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund. | The following table summarizes the roll-forward of Level 3 fair value measurements as of September 30, 2026 (in thousands):
| Balance as of December 31, 2025 | | $ | 7,500 | |
| Transferable tax credits generated, net | | | 3,900 | |
| Other | | | 130 | |
| Balance as of March 31, 2026 | | $ | 11,530 | |
| Transferable tax credits generated, net | | | 5,112 | |
| Proceeds from sale of 2025 tax credits | | | (8,852 | ) |
| Other | | | 475 | |
| Balance as of June 30, 2026 | | $ | 8,265 | |
| Transferable tax credits generated, net | | | 7,565 | |
| Other | | | (1 | ) |
| Balance as of September 30, 2026 | | $ | 15,829 | |
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