Income Taxes |
6 Months Ended |
|---|---|
Jun. 28, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes In the quarter ended June 28, 2025, income tax expense was $12,606 resulting in an effective income tax rate of 12.9% and in the quarter ended June 29, 2024, income tax expense was $11,485 resulting in an effective income tax rate of (9.3)%. In the six months ended June 28, 2025, income tax expense was $17,777 resulting in an effective income tax rate of 15.1% and in the six months ended June 29, 2024, income tax expense was $20,056 resulting in an effective income tax rate of (13.5)%. The Company's effective tax rates for the quarter and six months ended June 28, 2025 and June 29, 2024 primarily differ from the U.S. statutory rate due to valuation allowances against certain net deferred tax assets. Additionally, the Company had unfavorable discrete items of $2,832 and $1,274 for the quarter and six months ended June 28, 2025, respectively and had favorable discrete items of $1,629 and $1,622 for the quarter and six months ended June 29, 2024, respectively. The Organization for Economic Co-operation and Development (the “OECD”), an international association of 38 countries including the U.S., has proposed changes to numerous long-standing tax principles, including a global minimum tax initiative. On December 12, 2022, the European Union member states agreed to implement the OECD’s Pillar 2 global corporate minimum tax rate of 15% on companies with revenues of at least $790,000, which went into effect in 2024. While there is uncertainty whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which the Company operates have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. The Company does not expect Pillar 2 to have a material impact on its effective tax rate or its consolidated results of operations, financial position and cash flows for 2025. The Company is continuing to monitor the developing laws of Pillar 2 and its potential impact on future periods. As of June 28, 2025, a valuation allowance of approximately $346,550 was recorded against U.S. deferred tax assets. A valuation allowance release indicates that it is more likely than not that the deferred tax assets will be realized. The need for this valuation allowance is continuously evaluated and based on the Company’s assessment of current and anticipated future earnings, there is a reasonable possibility that the Company will have sufficient taxable income to release all, or a significant portion, of this valuation allowance within the next 12 months. A release of this valuation allowance would result in the recognition of certain deferred tax assets and a reduction in income tax expense for the period in which the release occurs. However, the exact timing and amount of the valuation allowance release is subject to the level of profitability that the Company can achieve. Subsequent to the end of the quarter, on July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA” or “the Bill”) into law. The Bill includes significant updates to federal tax law that may impact the Company. However, ASC 740 mandates that effects of changes in tax law be considered in the period in which the legislation is enacted into law. Consequently, the OBBBA has no impact on the Company’s income taxes for the quarter or six months ended June 28, 2025. The Company is currently evaluating the Bill and its potential impact on future periods.
|