Income Taxes |
6 Months Ended |
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Jun. 28, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The effective income tax rate for continuing operations was 13.6% and 1.3% for the three and six months ended June 28, 2025, respectively, and (107.1)% and (15.3)% for the three and six months ended June 29, 2024, respectively. In accordance with ASC 740-270, we recorded an income tax benefit of $3.5 million and $2.9 million from continuing operations in the three and six months ended June 28, 2025, respectively, and an income tax expense of $9.6 million and $6.1 million from continuing operations in the three and six months ended June 29, 2024, respectively. We applied our estimated annual effective tax rate to year-to-date income for includable entities during the respective periods. Entities that are currently generating losses and for which there is a full valuation allowance are excluded from the worldwide effective tax rate calculation and are calculated separately. The impact of significant discrete items is separately recognized in the quarter in which they occur. The tax expense for discrete items included in the tax provision for continuing operations for the three months ended June 28, 2025, was $0.5 million, compared to $9.4 million for the three months ended June 29, 2024. The discrete tax expense amounts for the three months ended June 28, 2025, comprised primarily of $0.6 million attributable to share-based compensation. The discrete tax expense amounts for the three months ended June 29, 2024, comprised primarily of $7.7 million attributable to changes in UTPs relating to a historical income tax audit and $2.2 million attributable to an increase in the valuation allowance recorded against our U.S. state tax attributes due to changes in estimated forecasted earnings. The tax expense for discrete items included in the tax provision for continuing operations for the six months ended June 28, 2025, was $15.0 million, compared to a tax provision of $12.1 million for the six months ended June 29, 2024. The discrete tax expense amounts for the six months ended June 28, 2025, comprised primarily of $14.2 million attributable to the valuation allowance on state tax attributes and $8.5 million of tax expense related to the court-ordered divestiture of Towanda, offset by $9.8 million of tax benefit due to goodwill impairment. The discrete tax expense amounts for the six months ended June 29, 2024, comprised primarily of $9.7 million of tax expense due to changes in UTPs from ongoing audits and $2.3 million attributable to an increase in the valuation allowance recorded against our tax attributes due to changes in estimated forecasted earnings. A valuation allowance is recorded when it is more likely than not that some portion of the deferred tax assets will not be realized. In making this determination, we consider all available positive and negative evidence and make certain assumptions. We consider, among other things, our deferred tax liabilities, the overall business environment, our historical earnings and losses, current industry trends, and our outlook for future periods including consideration of certain strategic actions and tax planning opportunities we expect to consummate within the year. The amount of the deferred tax asset considered realizable could materially change in the near term if estimates of future taxable income from these considerations, in conjunction with tax law changes from OBBBA, do not materialize. Under ASC 740-10, we provide for UTPs and the related interest expense by adjusting unrecognized tax benefits and accrued interest accordingly. We recognize potential interest and penalties related to UTPs in income tax expense. As of June 28, 2025 and December 31, 2024, we had a liability for unrecognized tax benefits without regard to accrued interest of $48.5 million and $43.7 million, respectively. The U.S. Congress, the OECD, the EU and other government agencies in jurisdictions in which we and our affiliates do business have maintained a focus on the taxation of multinational companies. During 2023, the OECD issued administrative guidance for Pillar Two, which generally imposes a 15% global minimum tax on multinational companies. Many Pillar Two rules are effective for fiscal years beginning on January 1, 2024, with other aspects to be effective from 2025. We regularly monitor developments in our jurisdictions and consider the impact of the tax-related proposals as they arise. We have included the estimated impacts of Pillar Two rules in our estimated annual effective tax rate. As of June 28, 2025, the Company maintained a partial indefinite reinvestment assertion on its post-2017 undistributed foreign earnings. On July 4, 2025, President Trump signed into law the OBBBA. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including accelerated tax deductions for qualified property and research expenditures, modification of the business interest expense limitation, and changes to the international tax framework. We are currently assessing the impact of the legislation on our consolidated financial statements and our business. Any immediate impacts of the OBBBA will be recorded upon enactment in the third quarter of 2025.
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