v3.26.1
Income Taxes
 6 Months Ended
Jul. 04, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table sets forth the effective tax rate for the three and six months ended July 4, 2026 and June 28, 2025:
Three Months EndedSix Months Ended
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Effective tax rate15.7 %19.4 %16.5 %19.1 %
For the six months ended July 4, 2026, the Company’s estimated annual effective income tax rate of ordinary forecasted pre-tax book income was approximately 16.7%, which varied from the statutory tax rate primarily due to state income taxes, foreign tax rate differentials. For the six months ended July 4, 2026, the effective tax rate was 16.5%, which varied from the annual effective tax rate due to discrete items recorded during the period, including updates to state rates, and changes in the valuation allowance on IRC Section 163(j). The change in the effective tax rate for the six months ended July 4, 2026 compared to the six months ended June 28, 2025 is primarily due to the increase in pre-tax book losses and impacts of the valuation allowance on IRC Section 163(j) business interest. The One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025. The enactment did not have a material impact on our effective tax rate for the year ended December 31, 2025 or for the six months ended July 4, 2026.
As of July 4, 2026, the Company had federal IRC Section 163(j) interest limitation carryforwards of approximately $879.4 million, which do not expire. Management has recorded a valuation allowance against these deferred tax assets totaling $120.1 million, resulting in a net federal and state impact of $26.8 million as of July 4, 2026, due to the Company’s cumulative loss position and projected sustained limitations on interest deductions. The IRC Section 163(j) valuation allowance increases the total valuation allowance to $42.2 million. The valuation allowance is provided for deferred tax assets for which the Company believes it is more likely than not that a portion of the tax benefits will not be realized. The Company determined the new valuation allowance was needed despite the more favorable EBITDA-based adjusted taxable income calculation under OBBBA.