v3.26.1
Income Taxes
 6 Months Ended
Jun. 28, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income taxes and the effective income tax rate are as follows ($ in millions):
Three Months Ended
Six Months Ended
June 28, 2026June 29, 2025June 28, 2026June 29, 2025
Federal, state and foreign income tax expense$2.6 $1.7 $0.5 $2.6 
Effective income tax rate37.1 %35.4 %3.0 %25.6 %

The Company’s effective tax rate (ETR) for the three months ended June 28, 2026 increased to a provision of 37.1% from a provision of 35.4% in the prior year period. The provision for income taxes for the three months ended June 28, 2026 and the three months ended June 29, 2025 included a benefit of $1.7 million and $0.6 million, respectively, for stock compensation related items.

The Company’s effective tax rate (ETR) for the six months ended June 28, 2026 decreased to a provision of 3.0% from a provision of 25.6% in the prior year period principally due to increased tax benefits related to stock-based compensation. The provision for income taxes for the six months ended June 28, 2026 and the six months ended June 29, 2025 includes a benefit of $8.9 million and $2.2 million, respectively, for stock compensation related items.

The Company calculates its interim income tax provision in accordance with ASC Topic 270, “Interim Reporting,” and ASC Topic 740, “Accounting for Income Taxes.” The Company calculated the provision for income taxes during the interim reporting period by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.

As of June 28, 2026, the Company had $28.8 million of unrecognized tax benefits. Included in the balance of unrecognized tax benefits at June 28, 2026 are $23.6 million that, if recognized, would impact the Company’s effective income tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. For the six months ended June 28, 2026 and June 29, 2025, the Company recorded $0.4 million and $0.1 million expense, respectively, related to the increase in interest and penalties. For the six months ended June 28, 2026 and June 29, 2025, there was no material benefit recorded related to the removal of interest and penalties.

The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenue and profits above certain thresholds (referred to as Pillar 2). Although the U.S. has not enacted legislation to implement Pillar 2, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. The OECD issued new administrative guidance on January 5, 2026, with respect to Pillar 2 which modifies key aspects of the framework for countries to enact in their own laws. This new guidance reaffirms we do not expect Pillar 2 to have a material impact on our effective tax rate or our financial results or cash flows.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted. Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of U.S. based research and development expenditures under Internal Revenue Code (IRC) Section 174 (reinstating full expensing beginning in 2025), extension of bonus depreciation, and revisions to international tax regimes. The Company recognized the income tax effects of the OBBBA in the quarter it was enacted, and continues to recognize the tax effects, which were not material, in its quarter ended June 28, 2026.