Prepaid Expenses and Other Current Assets |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid Expense and Other Assets, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets are comprised of the following:
In February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) on goods imported into the United States were unauthorized. The Company serves as the importer of record for certain products previously subject to IEEPA tariffs and paid approximately $25.8 million in such tariffs since their inception. The U.S. Court of International Trade subsequently ordered U.S. Customs and Border Protection (“CBP”) to refund all collected IEEPA tariffs. The Company has complied with CBP’s prescribed administrative process through their Consolidated Administration and Processing of Entries (“CAPE”) system for seeking these refunds. Based upon the U.S. Supreme Court’s ruling, related U.S. Court of International Trade (“CIT”) proceedings, and the Company’s submission of tariff refund requests and assessment of the recoverability of amounts paid, the Company has concluded as of March 31,2026 that the recovery of previously incurred IEEPA tariffs is probable. The estimate reflects Company’s judgment regarding the portion of previously recognized IEEPA tariffs expected to be recoverable through the refund process administered by CBP and it may be subject to change based on the ultimate resolution of refund claims. The ultimate amount of recoveries may differ from the Company’s estimates, based on additional guidance from CBP, the resolution of specific entry-level claims or other administrative developments. To the extent there are changes in amounts that become recoverable, including any associated interest, such amounts will be recognized in the period in which information about the probable and reasonably estimable amounts becomes known to the Company.
Accordingly, during the three months ended March 31, 2026, the Company recognized a receivable in prepaid expenses and other current assets of approximately $25.8 million, with a corresponding reduction of $18.6 million to cost of sales and $7.2 million to capitalized tariffs in inventory. Of the $18.6 million cost of sales reduction, $14.4 million related to amounts recognized in cost of sales in 2025. Additionally, the Company also recognized $1.9 million of charges related to the reversal of duty drawback benefits attributable to IEEPA duties and other anticipated refund obligations. The Company believes it may also be entitled to interest on the refunded amounts; however, no receivable has been recognized for such interest as of March 31, 2026, as the amount and timing of receipt cannot be reasonably estimated at this time.
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