Income Taxes |
6 Months Ended |
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Jun. 28, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The income tax provision for interim periods is generally determined using an estimate of the Company’s annual effective tax rate adjusted for discrete items. Each quarter the estimate of the annual effective tax rate is updated, and if the Company’s estimated tax rate changes, a cumulative adjustment is made. The effective tax rate for the thirteen weeks ended June 28, 2025 and June 29, 2024 was 28.9% and 39.3%, respectively. The effective tax rate for the twenty-six weeks ended June 28, 2025 and June 29, 2024 was 32.2% and 16.3%, respectively. The effective tax rates differed from the federal statutory rate primarily due to stock-based compensation and Internal Revenue Code Section 162(m) excess compensation. In the normal course of business, the Company is required to make estimated tax payments throughout the year based on the expected tax liability for the full year. This typically results in a prepaid balance during the first half of the year, as the Company earns most of its profit in the second half of the year. As of June 28, 2025, the Company had a $15.7 million balance in prepaid income taxes, which is classified in prepaid expenses and other current assets in the unaudited interim Condensed Consolidated Balance Sheets. The Organization for Economic Cooperation and Development (“OECD”) proposed model rules to ensure a minimal level of taxation (commonly referred to as Pillar II) and the European Union member states have agreed to implement Pillar II’s proposed global corporate minimum tax rate of 15%. We considered the applicable tax law changes from Pillar II implementation in the relevant countries in which we operate, and there is no material impact to our tax provision for the thirteen and twenty-six weeks ended June 28, 2025. We will continue to evaluate the impact of these tax law changes in future reporting periods. On July 4, 2025, the United States enacted the One Big Beautiful Bill Act (“OBBBA”), which encompasses a broad range of tax reform provisions affecting businesses, including extensions and modifications of certain provisions of the Tax Cuts & Jobs Act (“TCJA”). The OBBBA also makes some key elements of the TCJA permanent, including 100% bonus depreciation, domestic research cost expensing, and deductibility of business interest expense. Under GAAP, the effect of such tax legislation changes is required to be recognized in the period of enactment. As the OBBBA was signed into law after the Company’s current period-end date, the financial statements as of June 28, 2025 do not reflect the effects of the new tax legislation. However, we are currently evaluating the impact of the tax reform and the results of such evaluation will be recorded in our results of operations, financial position and cash flows in the reporting periods in which such provisions are effective.
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