RESTRUCTURING AND RELATED ACTIVITIES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RESTRUCTURING AND RELATED ACTIVITIES | RESTRUCTURING AND RELATED ACTIVITIES During the second quarter of 2026, the Company launched a cost savings project (“Catalyst”) with the majority of its execution taking place this quarter. One of the key initiatives under Catalyst was a restructuring action (“Catalyst Restructuring”) intended to simplify the business and reduce costs by reducing the size and reassessing the geographic locations of the Company’s distribution network, streamlining the Company’s internal use software, and aligning organization resources with current revenue levels. The Catalyst Restructuring included facility closures, sunsetting of internal use software, workforce reductions, and other related restructuring activities. The Catalyst Restructuring was completed as of September 30, 2026, and we do not anticipate material Catalyst Restructuring related charges in future periods. Broader non-restructuring Catalyst initiatives, such as AI-related efficiencies, will continue. The Company had no significant restructuring charges during the three and nine months ended September 30, 2025. Restructuring and Related Charges The following table summarizes restructuring and related charges recognized during the three and nine months ended September 30, 2026 (in thousands):
The Company recorded restructuring and related charges of $15.4 million during three and nine months ended September 30, 2026, consisting primarily of: Loss on disposal of fixed asset charges of $8.9 million, related to property, plant and equipment, other long-lived assets, and right-of-use asset impairments net of the relief of lease liabilities associated with the closure of our distribution center in Fort Worth, Texas, our office space in Lehi, Utah, and our product innovation center in Owings Mills, Maryland. These charges also include internal-use software costs for our coach and client mobile applications that were sunset as part of the Catalyst Restructuring. These charges are net of any salvage value. Fixed asset abandonment charges of $1.9 million, related to equipment abandoned in connection with reducing the leased footprint of our Havre de Grace, Maryland distribution center. Stock compensation expense reversals of $0.1 million related to stock-based compensation expense previously recognized for employees who were separated under the Catalyst Restructuring. Facility closure and other exit costs of $1.2 million, related to lease termination costs, real estate broker fees, decommissioning, and site restoration costs. The Company’s liability for facility closure and other exit costs was $0.8 million as of September 30, 2026, included within the accounts payable and accrued expenses caption on the Condensed Consolidated Balance Sheets. Employee termination benefits of $1.0 million, related to severance, continuation of benefits, and other employee-related costs. The Company’s liability for employee termination benefits was $0.7 million as of September 30, 2026, included within the accounts payable and accrued expenses caption on the Condensed Consolidated Balance Sheets. Other restructuring-related costs of $2.4 million, primarily consisting of cost to disassemble and move equipment at our distribution center in Havre de Grace, Maryland as a result of reducing our lease footprint at the location, costs to move inventory from our exited distribution center in Fort Worth, Texas to our distribution center in Havre de Grace, Maryland, warehouse management system license costs associated with our exited distribution center in Fort Worth, Texas, and contract termination costs. The Company’s liability for other restructuring-related costs was $2.4 million as of September 30, 2026, included within the accounts payable and accrued expenses caption on the Condensed Consolidated Balance Sheets. Restructuring and related charges recognized during the three and nine months ended September 30, 2026, were recorded in the Company’s Condensed Consolidated Statements of Operations as follows:
Cost of sales is comprised of loss on disposal of certain fixed assets, costs to move inventory from our exited distribution center in Fort Worth, Texas to our distribution center in Havre de Grace, Maryland, and contract termination costs. These costs are consistent with historical transactions classified within cost of sales.
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