The Company estimates an allowance for credit losses with its accounts receivable resulting from the inability of its customers to make required payments, which is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. In determining the adequacy of the allowance, management specifically analyzes individual accounts receivable, historical bad debts, customer concentrations, customer creditworthiness, current and reasonable and supportable forecasts of future economic conditions, accounts receivable aging trends, and changes in the Company’s customer payment terms.

The balance of accounts receivable as of the beginning of the reporting period was $23.7 million and $23.6 million as of January 1, 2026, and 2025, respectively. The components of the Company’s accounts receivable are as follows:

A summary of activity in the allowance for credit losses is as follows: